Huawei And 70 Of Its Affiliate To Be Included In Export Blacklist

Huawei
Visitors walk past Huawei's booth during Mobile World Congress in Barcelona (Photo: Reuters)

The United State's latest move against the world's largest telecommunications equipment supplier, Huawei, is now threatening to destabilize its $105 billion business.

Trump's administration recently announced that it would be placing the Chinese company under its exports blacklist, essentially blocking the firm from importing US components and technologies without prior government approval. Along with Huawei, the US also threatened to include 70 other firms affiliated with the firm on the so-called "entity list."  

The move has been seen by some as another measure in the country's fight against China in the ongoing trade war.

While the administration had expressed its intention of placing Huawei on the blacklist, the ban has yet to take effect. It is not yet clear when exactly the exports ban would take effect, but its ramifications are already reverberating within the industry.

The United States previously placed a similar ban on ZTE Corp last year, which resulted in the total decimation of its US business. The ban was eventually lifted, but it had already resulted in millions of dollars in losses for the company. According to analysts, a ban on Huawei will likely have the same effect. Although, due to the company's size and its global reach, the effects may relatively lesser.

The largest entities that would be affected by the ban would be Huawei's suppliers. In 2018, Huawei had spent more than $11 billion importing goods and components from the United States from companies such as Intel, Micron Technology, and Qualcomm.

These companies may see their revenues disappear if the ban will indeed be imposed. Huawei will, of course, suffer as well as there are really no Chinese firms that can replace its US suppliers.

Meanwhile, other effects of the ban may see China retaliating with its own ban on US companies such as Apple. This could adversely affect their already dismal sales numbers within the country, further lowering revenues across the board.

The future of 5G in the United States could also be in peril, as Huawei is currently the leading supplier of equipment for the particular technology. US telecom carriers have so far resisted calls to ban the company in the country as they would essentially be left without a 5G supplier.

Last year, Huawei had reported revenues of around $105 billion; a figure eight times that of ZTE's. That amount of drastically drop this year, if the US does go ahead with its planned ban. Huawei is also currently facing mounting international scrutiny as the US alleged that it was using its equipment to allow China to spy on other countries. Huawei has all but dismissed the allegations and have called them completely unfounded. 

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