This article is based on an article from the Japanese edition of Engadget and was created using the translation tool Deepl.
As reported in various media outlets, the U.S. Department of Commerce has announced that it will further tighten export controls on Huawei Technologies.
The U.S. Department of Commerce has already indicated to Huawei that it will not extend its temporary permission to provide updated software from Google, and it has also expired. As a result, Huawei will not only be unable to develop smartphones with Google services installed, but will also be unable to update past products to include Google Mobile Services (GMS). In addition, the additional restrictions will make it extremely difficult to procure SoCs (semiconductors that integrate key functions, including processors and GPUs).
The US government's intention seems to be to keep Huawei out of the global market by denying it access to the elemental technologies that form the basis of its software, and also to keep it out of the Chinese market, where it has a significant presence, by cutting off its channels for sourcing key components.
I'd like to follow the background of this, and consider the impact on the world around us.
Is it the U.S. government's intention to "choke the life out of persistent Huawei"?
U.S. Department of Commerce export restrictions prevented Huawei from using software provided by Google last May. It started with the official addition of Huawei and its 68 affiliates to the Entity List, which requires government permission for U.S. companies to do business with them. However, the U.S. Department of Commerce had issued temporary export permits because the immediate restrictions would have left security holes in Huawei devices unaddressed, which could have created a different threat.
The purpose of this temporary export permit is to give users more time to replace their Huawei equipment in the United States with another device. The decision to not extend the temporary permit in August of this year means that there is no longer a possibility that software developed by U.S. companies will be installed on Huawei products in the future.
Huawei, on the other hand, was looking to continue operations outside of the U.S. by taking its Huawei Mobile Services (HMS), which had been operating in China, global.
It wasn't necessarily working, but they were originally developing devices without GMS because Google was not able to expand its business in China.
That's why Huawei was surprisingly calm when the regulations first started. Besides, more than anything else, Huawei's main battleground is China. Huawei's explosive growth in market share in China and its core business of network infrastructure equipment probably gave it the confidence to do so.
However, the U.S. Department of Commerce restricted exports to Huawei of components using U.S.-manufactured equipment in order to prevent Huawei from doing business with Taiwan's TSMC, which has the most advanced semiconductor technology. Huawei's strength lies in its proprietary SoCs designed by subsidiary semiconductor maker HiSilicon, but the restrictions make it difficult for the company to manufacture SoCs. Even if Huawei were to outsource production of SoCs to foundries in China, they would not be able to develop SoCs with the same level of performance because of the age of the semiconductor technology.
So what about using other manufacturers' SoCs? This additional regulation covers products that come from any product or technology made in the US. For example, it would be difficult to transfer HiSilicon technology to Mediatek and then purchase Mediatek products in a roundabout way. The fact that the essential tools for semiconductor design are made in the U.S. will probably make it impossible to get them from Mediatek or even Samsung.
Huawei has emphasized that "the new measures cover semiconductor chipsets and not other components" in relation to the additional restrictions imposed by the US Department of Commerce. In other words, it does not include image sensors, memory or displays. Nevertheless, if SoCs cannot be procured, it will be impossible to produce smartphones.
Huawei also claims that "exports to Huawei are possible with permission from the US authorities," but at present, the chances of the US authorities granting permission are limited to cases where there would be some detriment to the US. For example, firmware updates for existing products were necessary for the US. In reality, however, it would have very little impact on the U.S., even if new Huawei devices could no longer be produced.
So we can safely assume that as long as the Trump administration recognizes that "Huawei is a U.S. security issue," the restrictions will not be loosened. And with the U.S. presidential race coming up, President Trump won't be able to stop shaking his fist at this time.
Things to keep in mind when continuing to use a Huawei device
The U.S. government's approach goes beyond the sanctions and will affect companies outside of China as well. For example, we saw iPhone sales fall in the Chinese market after the U.S. government tightened its restrictions. The iPhone 11 series will be a hit after that, but a stronger backlash in China is unlikely to have a positive impact on sales of U.S. products in China.
In addition, if production of Huawei devices ceases (or is reduced), even if other manufacturers will eventually fill the void, the manufacturers who would have supplied the displays, memories, and image sensors for these devices will have to reduce the number of components produced and revise their financial results downward because of the reduced availability of these components. In fact, Sony has stated that it will adjust production of its image sensors.
But our readers are probably most interested in what happens to Huawei devices and how the map of Android devices, including those from other manufacturers, will change.
My biggest concern is firmware updates for Huawei devices sold in Japan. Android devices generally have a shorter update period than iPhones, and security patches can stop being provided after a few years, but Huawei has been a good provider of updates.
However, if it becomes impossible to provide updates with GMS in the future, the likelihood of security patches being left unprovided increases. It may not be impossible to do a tour de force to encourage people to switch to the new HMS version of the firmware after taking a backup of the current device, but no user would probably want their device to be non-Google Play compatible for use in Japan. And there are third-party apps that will stop working without GMS. This could result in an increase in the number of devices with security holes left unattended.
However, some manufacturers leave it at that, providing few updates, so it's no different than those... We'd like to see Huawei declare "no worries" to existing users and state how they're going to deal with the issue, before making a plea for "no impact". On the other hand, for devices with HMS as standard (no GMS) such as the P30 Pro, we can't deny that this may have an impact in the long run, but at this point in time, there shouldn't be much change.
Whether Huawei can continue to do business or not
From an end user's point of view, there is a lot of concern about the devices they get, the services they receive through the devices, and how Huawei's leadership in camera quality and features will change in the future. However, the business press is talking about the impact on the earnings of companies that do business with Huawei.
Some have speculated that Huawei's component inventory will run out by the end of the year and that the company will not be able to produce devices after that. Indeed, if it is unable to procure Mediatek's SoC, it will not be able to produce the entry to middle class smartphones that support Huawei's devices in China.
In addition, the pace of development of proprietary SoCs will also be temporarily slowed down due to the time and effort required to update the design tools used in the past. Also, when it comes to finding foundries to mass-produce HiSilicon designed SoCs, if neither TSMC nor Samsung can be used, it is hard to imagine how and where they will be produced.
The company will also have to make a business decision as to whether it needs to survive as a handset maker to overcome these difficulties. Huawei is a telecom infrastructure company that specializes in network communications equipment, and its end-user handset business was a "latecomer".
I don't think Huawei will slow down maintenance of its own handsets for now, but if the long-term prospects for the handset business disappear, I wouldn't be surprised if the company's investments are curtailed and slowly fade out.
Of course, there's no possibility that something happens to change Trump's mind while Huawei is still in business, and it could go back to the way it was before. Or, if it holds out until next year, there's a chance that the U.S. administration could change to the Democratic Party and regulations could be relaxed.
For the past year, Huawei's handset business has been predicated on survival, with the large Chinese market as the backbone of the business. However, with new regulations that will likely prevent the production of handsets, the continuity of the business itself will undoubtedly be a concern for users of Huawei handsets for some time to come.
At this point in time, when it's not clear whether the export restrictions are worth the trouble the U.S. government should be grasping for, something that will not only affect Huawei as a company in the U.S.-China fistfight, but also the component manufacturers and even the consumers, it's just annoying to the consumers. I hope that at least they leave some room for response to the security risk to the extent that it can be addressed.
This article is based on an article from the Japanese edition of Engadget and was created using the translation tool Deepl. The Japanese edition of Engadget does not guarantee the accuracy or reliability of this article.