How Will the US Ban on Huawei Affect the Global Component Market?

In May, it was announced that the US government was imposing a ban on exporting American technology to Huawei. The US is a significant supplier of Huawei components and the company relies on them for manufacturing mobile phones and other telecommunications network devices.

So, what does this ban mean for Huawei and, more broadly, how will these developments affected the global component market?

Related article: Dealing With Trade Wars and the Electronic Component Shortage

The story so far

Huawei is not outrightly banned from using US technologies and services, however, those companies who wish to work with them will have to seek permission to do so beforehand (Source: Telecoms). This is because, on 15th May 2019, the government added Huawei Technologies and its affiliated technologies to the ‘Entity List’, which imposes an export license requirement.

In 2018, Huawei spent $11 billion on sourcing components from U.S. technology firms, including Qualcomm, Intel and Micron Technology (Source: TelecomLead). This decision to limit component supply to Huawei is likely to have a significant impact on jobs, both in China and the US, as well as destabilising the atmosphere of trust and collaboration which supports the global supply chain.

While Huawei has enough components stockpiled to help it survive for the next few months, or perhaps even longer, they will be faced with the difficult task of working out how to manufacture their smartphones without the use of US components.

What’s more, Google have issued an executive order revealing that they will not be allowing Huawei to use Android, creating significant software issues in the manufacturing of their phones.

The impact on the 5G networks

As well as being a large smartphone manufacturer, Huawei Technologies are also directly involved in the building of the 5G networks and infrastructure across the globe. The block on Huawei, if extended across more countries, may slow down major 5G developments.

The UK have already begun to roll out 5G networks, with EE launching their service this month which used Huawei’s equipment. However, the future of Huawei in the UK, and in other countries across the globe, is still uncertain and telecoms companies have been under increased pressure to decide whether Huawei will be a part of future planned 5G network rollouts planned for this year (Source: The Telegraph). 

Overall, the situation with the Huawei components ban remains volatile and unpredictable, but it certainly will continue to have an impact on the global supply chain landscape.

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