The United States is delaying some restrictions on U.S. technology sales to Chinese tech powerhouse Huawei in what it calls an effort to ease the blow on Huawei smartphone owners and smaller U.S. telecoms providers that rely on its networking equipment.
The Trump administration insists the sanctions are unrelated to its escalating trade war with China, and many analysts see it as aimed at pressuring U.S. allies in Europe to accede to Washington’s entreaties to exclude Huawei equipment from their next-generation wireless networks, known as 5G.
The U.S. government on Monday amended last week’s order restricting all technology sales to Huawei, the world’s biggest maker of mobile network gear and the No. 2 smartphone brand. It granted a temporary, 90-day exemption, but only for existing hardware and software.
It also said that grace period could be renewed.
Shares in tech companies rose Tuesday after some news organizations erroneously reported that the amended order amounted to a blanket reprieve for Huawei.
“It’s just housekeeping. It’s not a capitulation. It’s a very pragmatic solution to avoid unintended consequences to third parties,” said Kevin Wolf, who oversaw a related case involving China’s No. 2 telecoms supplier ZTE as assistant secretary of commerce for export administration under President Barack Obama.
The U.S. claims Huawei is a cybersecurity risk and has targeted it against the backdrop of a wider battle with China over economic and technological pre-eminence that has included tariffs on billions worth of trade and limits on business. U.S. officials said Huawei is legally beholden to China’s repressive rulers but have provided no evidence that it has intentionally allowed its equipment to be used for espionage.
Huawei founder Ren Zhengfei sought to put a brave face on the situation, saying Tuesday that the company has “supply backups” if it loses access to American components. Huawei Technologies Ltd. relies on Google’s Android operating system and U.S. components suppliers for its smartphones.
“I should say this impact will be very big, but Google is an extremely good company,” Ren Zhengfei told Chinese reporters. “We are discussing emergency relief measures,” he added, without giving details.
Industry analysts said Huawei might struggle to compete if it cannot line up replacements for Google services that run afoul of the U.S. curbs.
Google said its basic services still will work on existing Huawei smartphones. However, the company would be barred from transferring hardware or software directly to Huawei.