Huawei and US sanctions – Le Grand Continent

Since the implementation of the American sanctions, mainly under the mandate of Donald Trump, the turnover of Huawei has started to decrease significantly.

  • After years of uninterrupted growth, Huawei’s revenue collapsed nearly 30% in 2021 compared to the previous year.
  • Huawei’s profits continued to fall 67% in the first quarter of 2022, compared to the same period last year.

This economic trajectory can be explained by geopolitical factors, starting with the consequences of Huawei’s 5G mobile network restrictions throughout the United States.

  • These decisions, which have persisted despite the changes of administration, are explained by a shared consensus within theestablishment American: Huawei poses a national security risk to the country.
  • The company is on the list of 20 Chinese companies believed to be controlled by the People’s Liberation Army1.
  • The US government therefore banned Huawei from buying a range of imported components, including important chips from Qualcomm Inc., and urged its allies to do the same, claiming that Huawei’s equipment and their 5G network could be used for espionage.

Generally speaking, the wealthy Western markets of US allies have been relatively sensitive to these arguments against Huawei.

  • Australia, Canada, New Zealand and Sweden have followed Washington in banning the sale of Huawei devices altogether. In Britain, new rules force operators to remove all Huawei technology from public 5G systems by 2027.
  • Other countries have more nuanced positions. France has asked operators to remove Huawei equipment from several parts of their networks while Japan has signaled that the company is not welcome.

Conversely, developing countries still seem ready to welcome telecommunications infrastructures built by Huawei.

  • As part of the Belt and Road Initiative, Huawei is playing an important role for the Chinese Communist Party as the company builds much of the telecommunications networks in Asia and Africa.
  • The company provides 5G networks in Indonesia, Saudi Arabia, South Africa and Turkey. Brazil, another potentially big market, has flip-flopped but doesn’t seem ready to issue a ban.
  • Huawei executives say they have signed more than 5,000 commercial 5G contracts globally, ranging from full deployment of 5G networks for national carriers to network upgrades in ports.

In any case, the dynamic of American sanctions with regard to Chinese technologies does not seem ready to stop – and this whatever the result of the midterms of November 8.

  • This month, the Biden administration announced new restrictions that will directly hurt more Chinese companies operating in strategic areas, like artificial intelligence and supercomputers.
  • A number of Chinese companies, government research labs and other entities are expected to face restrictions similar to those suffered by Huawei two years ago.

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Huawei and US sanctions – Le Grand Continent

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