Huawei supply chain alert has not been released, 5G products are not affected by the ban

In the crackdown of the Export Control Regulations, US companies have been seeking ways to restore supply to Huawei, and now most people may be relieved.

On June 29, US President Trump said at a press conference held during the G20 summit in Osaka, Japan, that US companies are allowed to continue selling products to Huawei.

Wang Xiaolong, special envoy of the G20 and director of the International Economics Department, said that Trump said at the press conference that the US may lift some restrictions on Huawei. If the US says it is done, "we must be welcome."

Huawei has not responded to this news for the time being, and Intel, Micron and other US companies in the supply chain said they are still seeking confirmation from the headquarters.

"There is no more news at present. We will continue to respect and abide by the laws and requirements of all countries and governments in our global business." A US supplier who did not want to be named told reporters that it has begun to perform in the past two weeks. Some orders for unrestricted products are supplied to Huawei. However, due to the large uncertainty surrounding Huawei-related issues, it is currently impossible to estimate the shipment or delivery cycle to Huawei.

Hu Houkun, chairman of Huawei's rotating chairman, told the First Financial Reporter at Shanghai MWC that Huawei's components affected by US sanctions have found alternative solutions. Now the supply is not greatly affected, whether it is network or mobile phone business, although there are some Fluctuating, but all are normal. Asked if the US company resumed supply, Huawei's attitude, Hu Houkun said that it will continue to cooperate, Huawei is a staunch supporter of the Android system.

Alert "not removed"

On June 29, Wang Xiaolong, special envoy of the Chinese Ministry of Foreign Affairs G20 and Director of the International Economics Department, said: Trump said at a press conference after him that the US may lift some restrictions on Huawei. If the US says it is done, "we must be welcome." Because Huawei is a private company, and its information technology is in the leading position in the world. Such a company, regardless of where it invests, or participates in the development, construction, and operation of the local communications industry, will play a very good role in promoting the local communications industry.

On May 16, Huawei’s inclusion in the “list of entities” by the US Department of Commerce sparked public concern. This means that the United States will ban Huawei from purchasing important US technology without special approval and effectively prohibit its equipment from entering the US telecommunications network on the basis of national security.

Huawei responded at the time by opposing the decision of the US Department of Commerce's Bureau of Industry and Security (BIS). This is not in the interest of any party. It will cause huge economic losses to US companies that cooperate with Huawei, affect tens of thousands of jobs in the United States, and undermine cooperation and mutual trust in global supply chains.

As the US announced the inclusion of Huawei in the “entity list”, some companies in the ICT industry chain were all in an “anxious” state. It can be seen that in the 2018 US$70 billion purchase of Huawei, about 11 billion US dollars are from American companies such as Qualcomm, Intel and Micron Technology. Sanctions Huawei, then the part of the revenue of these companies will be directly visible.

In the latest developments, some US companies have begun to act to avoid greater losses.

Last week, a number of US companies confirmed that they have resumed product supply to Huawei. The CEO of Micron Technology publicly stated at the financial analysis meeting that it began to supply some semiconductors to Huawei two weeks ago. “We have confirmed that not all existing goods are subject to export management regulations or entity lists, so it is possible to legally restore some of the supply,” Micron said.

Affected by this news, on June 26, Intel and Qualcomm shares rose 3%, and Micron's share price soared 13.34%. In addition, NVIDIA rose 5%, AMD rose 4%

But this does not mean that the "alerts" of sanctions have been completely removed. Trump made it clear that the United States did not remove Huawei from the Ministry of Commerce's export control blacklist.

Moreover, according to the analysis of many law firms at home and abroad, the products that the United States has resumed supply to Huawei are “non-US manufacturing”. There are various regulatory thresholds for the export of non-US-made products or technologies under § 734.4 and the second supplement to the Export Control Regulations. That is to say, part of the supply channel that is temporarily restored is only the exploration of the US technology company's export guidance based on the Bureau of Industry and Security (BIS), and this kind of exploration may be rejected by BIS at any time.

For Trump's remarks, a Huawei insider told reporters that the internal situation is still in a "wartime" state and has not been relaxed due to changes in the external environment.

5G products are not affected by the ban

In the latest interview, Huawei said that Huawei's 5G technology products are completely immune to “US sanctions” and that the 5G contract has been fully delivered on time.

Huawei’s rotating chairman Hu Houkun told reporters including the First Financial News that at present, Huawei has signed 50 commercial contracts worldwide and shipped 100,000 5G base stations. He said that it is expected to ship 500,000 base stations by the end of the year.

"After the US sanctions, Huawei has adopted a series of coping strategies to ensure that business activities are less affected or unaffected." Hu Houkun told reporters that on the one hand, Huawei must ensure compliance with business activities. Although Huawei believes that this sanction is unfair, Huawei still has to ensure that its global operations are compliant, including ensuring transactional compliance with operators and customers, and Huawei's internal business compliance. On the other hand, Huawei is also making a small impact on its business by researching its own products or finding alternative suppliers. At present, the alternatives formed have not compromised the performance of Huawei products, but may exceed the performance of previous products.

"Because Huawei's alternatives are not temporarily sought, Huawei's long-term strategy is to always adopt a diversified supply solution. Huawei has always insisted that diversified supply solutions are conducive to the healthy development of the industry. For the future, if American companies do not Subject to policy constraints, and willing to cooperate with Huawei, Huawei will not exclude cooperation with US companies." Hu Houkun said.


In response to the terminal operating system problem, Hu Houkun said that Android is an open source system, and Huawei is an important partner of Android. Facing the future, Huawei is still a staunch supporter of the Android ecosystem. Huawei is willing to adhere to the ecological development of Android. When it is not available, Huawei will have to resort to other means.

Huawei founder Ren Zhengfei also recently expressed his latest views on the list of entities.

On the afternoon of June 29th, Huawei’s Heartfelt Community released the minutes of the recent appointment of the Canadian “Global Post”. In the interview, Ren Zhengfei said that after the list of entities came out, the beginning of May and June began to have a little impact, but the impact was not great because production had inertia. We expect some impact in the second half of the year, but how big the impact is, it is not certain.

"The fundamental problem at the moment is that the United States wants to cancel the list of entities, not delays. The most painful thing to delay the list of entities is the US companies, not us. We are still in full swing, and the number of employees has expanded from 188,000 to 194,000 because To do version switching, you need to increase the number of engineers." Ren Zhengfei said that all core cutting-edge chips, Huawei has no problem, can be completely supplied by itself, but a small number of parts replacement needs to be replaced, during the version switching, the capacity does not come, this It has some impact on development.

Ren Zhengfei said that Huawei originally predicted that it could achieve $135 billion in revenue this year (but affected by sanctions) by $30 billion, and about $100 billion, but in fact, the real situation reflected in the financial statements is better than our forecast.


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