Richard Yu, CEO of Huawei’s consumer business, described the U.S. blacklisting as a “big surprise,” and one that means “a very tough time” for the consumer business. If that wasn’t obvious enough with the Google suspension, it is now, with the almost simultaneous news that chip-maker ARM and mobile network EE have dealt further crushing blows to the company.
On Wednesday, the BBC reported that “U.K.-based chip designer ARM has told staff it must suspend business with Huawei… ARM instructed employees to halt ‘all active contracts, support entitlements, and any pending engagements’ with Huawei and its subsidiaries to comply with a recent US trade clampdown.” This comes about because ARM’s designs, which “form the basis of most mobile device processors worldwide” contain “U.S.-origin technology.”
The BBC quoted one industry analyst who said that the move could be an “insurmountable blow to Huawei’s business.”
Also on Wednesday, EE, Britain’s largest mobile phone network announced that it will deliver the country’s first 5G network this month. Marc Allera, the chief executive of the consumer division of EE’s parent BT, said that “this is the start of the UK’s 5G journey and great news for our customers that want and need the best connections.”
Great news for customers, but more bad news for Huawei’s smartphone business. The FT was the first to report that “Britain’s largest mobile phone network has pulled Huawei’s phones from its 5G launch.” The newspaper said that EE “had planned to offer Huawei phones but decided to ‘pause’ their launch due to the uncertainty around the use of the Android operating system,” adding that “the company did not have the ‘surety of service’ it needed to offer long term contracts.”
On Tuesday Huawei CEO Ren Zhengfei told Chinese state media that the U.S. ban will not impact company plans. And EE will still be using Huawei radio equipment, alongside Ericsson, for the initial 5G network. But not the all-important smartphones.
“We’ve had to hold that back,” Allera. explained. “There are so many scenarios and we don’t have any clarity. But we can’t stand still. Nothing is crystal clear but we have to work within that ambiguity.”
EE’s 5G service will launch in six U.K. cities on 30 May, beating Vodafone’s July launch. People in London, Cardiff, Edinburgh, Belfast, Birmingham and Manchester will be joined by a further ten cities later in the year. Think of this as an appetizer, though, with the “full 5G service” not expected until 2022.
The U.S. blacklist, reported the South China Morning Post on Tuesday, “could obliterate demand for the Chinese company’s devices in overseas and give market leader Samsung a leg up in cementing its lead in Android devices.” Especially if the networks don’t make them available.
“As far as overseas markets go, this [U.S.] move just turned Huawei’s upcoming phones into paperweights,” Bryan Ma, vice-president of client devices research at IDC Asia-Pacific, told the newspaper.
Huawei has spent the last week putting a brave face on the news that the U.S. blacklisting will extend from 5G networks to consumer devices. That brave face has now become significantly more difficult to pull off.
A Huawei spokesperson told me by email that “we value our close relationships with our partners, but recognize the pressure some of them are under, as a result of politically motivated decisions. We are confident this regrettable situation can be resolved and our priority remains to continue to deliver world-class technology and products to our customers around the world.”
“Lose-lose,” the company tweeted at the weekend. “Washington’s decision to force U.S. companies to stop doing business with tech giant Huawei creates losers on both sides.” Right now, though, it’s looking much more one-sided than that.