Facing US Ban, Huawei Emerging As Stronger Tech Competitor

Long before President Donald Trump threatened to cut off Huawei's access to US technology, the Chinese telecom equipment maker was pouring money into research that reduces its need for American suppliers. Huawei's founder says instead of crippling the company, the export curbs are making it a tougher competitor by forcing managers to focus resources on their most important products. Little-known to Americans, Huawei Technologies Ltd. is the No 2 smartphone brand worldwide and the biggest maker of switching gear at the heart of phone networks. Its equipment is used by 45 of the 50 biggest global phone carriers.

Huawei is a pioneer in the emerging field of next-generation, or 5G, telecoms. It promises not just faster internet but support for self-driving cars and other futuristic applications. That fuels Western security concerns and makes 5G politically sensitive.

The US claims the company might aid Chinese spying, though Huawei denies that and American officials have provided no evidence.

Huawei needs some American innovations, especially Google services available on Android phones, but industry experts say the company is increasingly self-sufficient after spending 485 billion yuan (USD 65 billion) on research and development over the past decade.

"They have a strategy to become completely independent from U.S. technology. And in many areas they have become independent," said Bengt Nordstrom of North Stream, a research firm in Stockholm.

Ren Zhengfei, who founded the company in 1987, acknowledged in an interview that phone sales will suffer if access to technology, including Google services for smartphones, is disrupted by the addition of Huawei to a US Commerce Department "entity list" that requires it to get government permission to buy American technology.

Phone sales could be USD 20 to USD 30 billion less than forecast over the next two years, Ren and other executives said, but the company will survive.

"When the entity list came out, they hoped Huawei would die," Ren said. "Not only did Huawei not die, it is doing even better." The company was added to the entity list on May 16 but already has been granted two 90-day extensions after American suppliers of processor chips and other technology warned they stand to lose billions.

Intel Corp. and other vendors that industry analysts say were paid a total of some USD 12 billion last year by Huawei have asked the Trump administration for permission to continue sales.

The biggest potential American blow to Huawei would be the loss of Google services that are standard features on Android-based phones. Huawei could use Android, which is open-source, but would lose Google's music, maps and other applications, making it harder to compete with Samsung, the No 1 smartphone brand.