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Huawei is facing new challenges this week with a new executive order that bans the company’s telecommunications equipment from being used in the US and a placement on the Entity List which essentially blacklists Huawei from doing business with U.S. companies.
If this sounds familiar, that’s because the same thing happened to ZTE last year. While ZTE’s placement on the Entity List nearly put the company out of business, the situation with Huawei is dramatically different. The main thing that sets the two companies apart is that Huawei is vertically integrated, building its own Kirin processes within its HiSilicon division while ZTE relied mainly on Qualcomm for the processors and cellular antennas used in its smartphones. Because of that one factor, ZTE was no longer able to buy chips from Qualcomm to put into its phones, essentially killing every device that’s currently in the company’s lineup and forcing them to go back to the drawing board to develop smartphones that use chips from other suppliers. ZTE managed to get the company delisted from the Entity List after paying a massive fine, but it’s still working to get its business back on track.
Fortunately, things are dramatically different for Huawei. All of the company’s main smartphone products rely on its own HiSilicon Kirin processors. The Huawei and Honor brands will be able to continue on their same trajectory with few changes, swapping out minor components going forward that may be affected by being blacklisted. That being said, the company’s personal computer business may be at risk since Huawei’s Intel-powered laptops will likely be affected by the situation.
We’ll have to wait to see how Huawei handles the situation, but if you’re a fan of the company’s smartphones, you can expect business as usual, at least for the foreseeable future.
Source: Reuters
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