Banning Huawei Means Its U.S. Suppliers Will Lose $11 Billion Annually

By Joy Tan, Senior Vice President, Public Affairs, Huawei Technologies USA

Banning Huawei

Following the expiration of  the U.S. government’s “general license” that permits companies to continue limited work with Huawei, the government extended the deadline for an additional 90 days until mid-November. Although a potential ban poses a challenge for Huawei, the impact on the U.S. is much greater, as there are many U.S. businesses that are valued partners of Huawei and rely on the revenue they receive from Huawei. 
One-third of Huawei’s supply chain comes from the United States. Last year alone, Huawei spent $11 billion with U.S. suppliers. However, the Executive Order now threatens 40,000 to 50,000 hardworking Americans whose jobs and families are sustained by their connection to the global supply chain. Some of these companies are based in the heartland of the U.S., which is also home to many of Huawei’s rural customers who depend on Huawei’s network equipment for fast and reliable connectivity. 

Managing a supply chain is an extremely complex task, as it requires continuously coordinating a multitude of moving parts within the ecosystem. In the event there is an attack on that ecosystem, particularly one that is politically motivated, it can drive a company to seek stability elsewhere in a different marketplace. Huawei has a responsibility to deliver high-quality products to its customers and relies on a stable and uninterrupted supply chain. If a resolution cannot be reached with the U.S. government, Huawei will have no choice but to redirect its investments and business elsewhere, thus creating an alternative supply chain that doesn’t include U.S. companies. 

Since being placed on the Entity List, many of Huawei’s U.S. suppliers have reduced their financial forecasts. Huawei’s business is a significant source of income for its U.S. suppliers, and many companies and their workers will suffer significantly from the loss of Huawei’s business in the longer term. 

In addition to the impact on U.S. suppliers, the potential ban has already changed Huawei’s plans to invest $600 million in the U.S. around R&D initiatives due to uncertainty surrounding the longer term prospects of continuing to work with U.S. suppliers. Huawei cares about its U.S. employees, customers and partners; to be forced to cut ties with them is the last thing the company wants to do.

Following President Trump’s meeting with President Xi in June, U.S. companies were encouraged to apply for licenses to sell products to Huawei. Since then, more than 130 companies have filed applications, yet none have been approved to date. Furthermore, Huawei has not received any correspondence from the Commerce Department or seen public information as to what criteria must be fulfilled for approval. Huawei strongly supports its U.S. suppliers – which include tech giants like Microsoft, Google, Intel, Qualcomm and Facebook – who seek exemption from the trade restrictions, but if the U.S. government remains unwilling to partake in dialogue to reach a resolution, that will drive plans to seek alternative suppliers.

In an interview with Bloomberg Businessweek, Brad Smith, the president and chief legal officer of Microsoft, a Huawei supplier lobbying for trade access, accused the U.S. government of being “un-American” in its treatment of Huawei for enforcing sanctions that would allow Huawei to only sell products to, but not buy from, U.S. companies. Huawei seeks to maintain stability in the market by being a proactive player that participates in the exchange of products and services that holistically benefits all companies involved and boosts innovation in the global tech industry. Government cooperation is key to the growth of global technology, and Huawei is willing to cooperate with the U.S. government, if they are willing to come to the table and have a discussion.

Huawei is only interested in working with the best and the brightest to harness the power of technology to improve the lives of people all around the world. However, in spite of the challenges posed by a potential ban, Huawei continues to excel. The financial results from the first half of 2019 show that revenue was up 23% year over year. Over many years, Huawei has nurtured and maintained a mutually beneficial relationship with its U.S. suppliers before the executive order and seeks a resolution with the U.S. government to continue partnering with the brilliant minds of hardworking Americans that help Huawei connect the world with intelligent products and solutions.