The ban imposed on the Chinese tech giant, Huawei, has forced many tech companies and component manufacturers in the US to suspend business with the company. As an unintended consequence, they are at a loss, and the impact on them is enormous.
China’s Huawei bought $70 billion worth of components and parts last year from 13,000 suppliers. Of that, about $11 billion was spent on products from dozens of US businesses, including computer chips from Qualcomm (QCOM) and Broadcom (AVGO), as well as Microsoft (MSFT) software and Google’s (GOOGL) Android.
Now, Trump threatens that revenue as the endless trade war against China persists. Analysts have argued that blacklisting Huawei puts at risk “both the company itself and the networks of Huawei customers around the world, as the firm would be unable to upgrade software and conduct routine maintenance and hardware replacement,” analysts from Eurasia Group said in a note.
And Washington’s ban against Huawei extends to foreign manufacturers and suppliers as they too cannot sell products with US-made components to the Chinese smartphone manufacturer. This effectively jeopardizes the supply chain for Huawei.
But Huawei said that they have been preparing for things like this to happen. “This decision is the latest move in the campaign against Huawei, waged by the US government for political reasons,” Huawei’s rotating chairman Ken Hu wrote in a memo to employees shared with CNN Business on Friday.
“The company has known this could be a possibility for many years,” he said. “We have invested heavily and made full preparations in a variety of areas.”
However, US suppliers couldn’t say the same as they were not ready for the ban. The United States has “made the most insane decision and put Huawei into the [controlled export list],” Hisilicon chief He Tingbo wrote. “Today, as history has made a choice, the spare tires we built have turned in to ‘Plan A’ overnight.”