Phil Siarri
May 20 · 3 min read
“Prison Cell” by Ichigo121212 (Pixabay)

By now, you might be aware of the US ban on sharing technology with Chinese telecom giant Huawei. The US / China trade war intensified with reports on Google confirming today it was restricting Huawei’s access to the Android mobile operating system which boasts a 75% global market share. While the Chinese company is experiencing significant growth in its local market (where Google services are rarely available to the general public), it has major consequences on its international expansion plans.

“What happens to Huawei smartphones and tablets now?” by Sky News, YouTube.

Sounds familiar? Perhaps you remember the whole ZTE saga in the United States… Let’s take a look back and compare both situations.

ZTE: A prequel in the US / China tech war

Huawei was not the first Chinese tech company to get on the US government’s “Entity List” (think trade blacklist).

In May 2018, the Trump administration banned sales of US-made parts to the Chinese phone maker ZTE, the second-largest telecom-equipment maker in China which generated $17 billion in revenue in 2017.

The ban was the result of an investigation into ZTE’s sales to North Korea and Iran, which the US said violated existing sanctions against those nations. ZTE had depended on American companies for specific components, and the ban affected ZTE’s operations and led to factory closures.

Following negotiations over the following months, the Trump administration secured an agreement with ZTE to lift the strict sanctions. In exchange for the US government loosening up sanctions against ZTE, the company was forced to pay a $1 billion fine and place $400 million in escrow (if the company violate sanctions again). Moreover, ZTE was forced to make changes to its executive team and allow a US compliance group to oversee activities. After the agreement got finalized, ZTE shares sharply dropped as investors wiped $3 billion off the company’s market value.

A compromise was finally reached that would prevent ZTE only from securing US government contracts.

But as you can expect… the saga continued. The US Senate later rejected Trump’s agreement with ZTE to ease sanctions and moved to ban sales of ZTE smartphones in the United States. A compromise was finally reached that would prevent ZTE only from securing US government contracts. In 2018, ZTE reported $12.7 billion in revenue ($4 billion less than the previous year).

How the situation differs for both companies

In China, not much will change for Huawei. Google’s business imprint is minuscule; the Play Store and Google Play Services are not available in this part of the world. The app store landscape is therefore rather scattered, with many OEMs running their own app store or licensing a third-party app store from other Chinese companies such as Tencent or 360 Mobile.

A key aspect to consider is that Huawei is a lot bigger and more independent than ZTE. American multinational semiconductor and telecommunications equipment company Qualcomm has a quasi monopoly on high-end Android SoCs (System on a chip) and cellular connectivity technology, yet Huawei is one of two Android manufacturers (the other being Samsung) with its own chip design division. Huawei flagships all have SoCs from Huawei’s HiSilicon chip division, and the firm even conceives its own 5G modems.

A key aspect to consider is that Huawei is a lot bigger and more independent than ZTE.

If the ban persists, a possible solutions for Huawei is to ship Google-less versions of Android with the Huawei App Store, extending its Chinese app ecosystem to the rest of the world. Huawei has done some development work on an in-house operating system, yet it’s unclear if this would be a better option than bypassing Android (remember the Windows Phone OS?😒) .

Huawei’s decision will be huge deal for Google and the rest of the Android ecosystem. Of course, a compromise could be reached between the US government and Huawei, but we’re obviously not there yet.

“Green and gray androids in a cube” Author provided.

FutureSin

Futurism articles bent on cultivating an awareness of exponential technologies while exploring the 4th industrial revolution.

Phil Siarri

Written by

Founder of Nuadox | Tech & Innovation Commentator | Industry Analyst | One of #TRFinRiskCanada40 | More about me> psiarri.xyz

FutureSin

FutureSin

Futurism articles bent on cultivating an awareness of exponential technologies while exploring the 4th industrial revolution.

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade