|21 May, 2019

Will the US ban on Huawei give it a welcome break?

The blow may look bad for Huawei, but the company has been preparing to deal with just such a situation

A woman walks past a Huawei shop in Beijing, China, January 29, 2019.

A woman walks past a Huawei shop in Beijing, China, January 29, 2019.

REUTERS/Thomas Peter

"Who are we? Huawei. That's how we respond to people who ask us about our pedigree," a senior Huawei official told me in jest when I visited the firm's Shenzhen headquarters back in 2015. By then, Huawei was already big in China but not really a household name in other markets. That year, however, was set to change the Chinese manufacturer's eminence on the global stage.Becoming the first Chinese mobile company to ship more than 100 million smartphones that year, Huawei emerged as a strong third contender in what had largely been a two-horse race between Samsung and Apple until then. It continued its growth literally unchecked, becoming the world's second largest smartphone manufacturer last year. From a 5 per cent share of the global smartphones market in 2015 (versus Samsung's 24 per cent and Apple's 18 per cent), Huawei's Q1 2019 market share clocked in at 17 per cent, ahead of Apple's 12 per cent and Samsung's 21 per cent.

The Huawei juggernaut was literally unstoppable, defying gravity and market conditions - until now, that is. Last week's national emergency declaration by the US president is now manifesting itself as isolation for Huawei, with Google quarantining it out of all but basic Android features. At the time of writing this piece, chipmakers Intel, Qualcomm, Broadcom and Infineon, and memory makers Western Digital and Micron had joined the boycott. Will the ban be a kill-switch for Huawei's ambitions or the right time to reboot? Much like the Chinese fortune cookies, no one can be sure about the prophecy that the ban hides in its belly. The blow may look bad for Huawei, but the company has been preparing to deal with just such a situation. It has had its own chip (the Kirin series) for years. Recently, it has also claimed to have developed an operating system, which it said it'd use only in extenuating circumstances. We'd certainly call these circumstances extenuating, but something that offers Huawei the perfect opportunity to go all-out with its homemade ingredients instead of banking on borrowed sauce. That'll be far better than going back to the 'who are we' era, Huawei.

 
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