The world’s largest telecoms company, Huawei, could be blacklisted by the United States months after the latter accused the Chinese telecoms giant of contravening its trade sanctions.
The ban could put to risk $105 billion worth of Huawei’s global telecoms supply chain business. The ban has also heightened the US-China trade war which has unsettled global markets. Last week, the US tariff increase on Chinese goods came to effect making major global financial markets to dip towards negative territory.
The government of Donald Trump had hinted that it could ban Huawei Technologies and 70 affiliates to its “Entity List”.
Should the take effect, Huawei will be banned from acquiring U.S. components and technology without government approval.
Several months ago, Huawei has been facing various legal battles and official criticisms over its mode of operations from the US and its ally countries. Many have accused Huawei of using its leadership position to spy for the Chinese government while the US has accused Huawei of intellectual property theft.
Earlier this year, the world was shocked when Huawei’s chief financial officer, Meng Wanzhou, a daughter to the founder of the Chinese telecom giant was arrested in Canada last December on behalf of the United States on allegations of violating America’s sanction on Iran.
Huawei’s founder, Ren Zhengfei, has denied all the allegations, calling them baseless and untrue.
However, the ban will also have wider consequences. According to data compiled by Reuters, out of $70 billion Huawei spent for component procurement in 2018, some $11 billion went to U.S. firms including Qualcomm, Intel Corp and Micron Technology Inc, and they could see that revenue disappear.
“This is going to be very messy,” a China-based source at a U.S. tech company said.
It will be tough for Huawei too, the person said, noting none of its U.S. suppliers “can be replaced by Chinese ones, not within a few years, at least. By then, they are already dead”.
Revenue for the company, also the world’s second-biggest maker of smartphones, touched 721 billion yuan ($105 billion) last year, eight times ZTE’s and half the annual sales of South Korea’s Samsung Electronics Co.
