After U.S. ban, telecoms halt orders for Huawei’s phones
Phone companies are scrapping plans to sell Huawei handsets as the effect of a U.S. supply ban spreads, threatening to impede the Chinese technology giant’s global smartphone ambitions.
Carriers in Japan, Taiwan and Britain stopped taking early orders for newer smartphone models from Huawei Technologies Co. on Wednesday or shelved plans to offer its handsets equipped for new fifth-generation wireless networks.
President Donald Trump’s move last week to put Huawei on an export blacklist
during a trade war with Beijing threatens to cut the tech company off from U.S. software and component suppliers. Telecom operators fear that could affect the functioning of its newest handsets as Huawei won’t get access to the most popular version of the Android mobile operating system developed by Alphabet Inc.’s Google.
If the boycotts multiply, it would be a major blow to Shenzhen-based Huawei, which is trying to overtake South Korea’s Samsung Electronics Co. as the world’s No. 1 handset supplier this year after leapfrogging Apple Inc. Mobile phones and other devices in Huawei’s consumer business account for almost half of its revenue.
More than 1 billion smartphones are sold annually worldwide, and many are bought wholesale by telecom operators. They include the devices in their wireless subscription plans for a monthly fee, making them a vital sales channel.
Britain’s BT Group decided not to include Huawei phones in Britain’s first 5G network because of uncertainty over whether they could use Android, a spokesman for the carrier said.
“We’ve put the Huawei devices on pause until we’ve got a bit more information on that,” the head of BT’s consumer division, Marc Allera, told reporters ahead of the start of 5G services next week.
Rival Vodafone Group paused pre-orders for the Huawei Mate 20X (5G) in the U.K. as “a temporary measure while uncertainty exists regarding new Huawei 5G devices,” a spokesman said.
And in a potentially more consequential blow, U.K. chip designer Arm Holdings, an important supplier to Huawei, said it was “complying with all of the latest restrictions set forth by the U.S. government.”
British retail chain Dixons Carphone followed suit in the afternoon, also pausing Huawei 5G phone preorders, a spokesman said.
NTT Docomo Inc., Japan’s largest operator, stopped taking pre-orders for Huawei’s new P30 handset, and KDDI Corp. delayed the introduction of the phone indefinitely. SoftBank Corp.’s YMobile announced a similar move, citing concerns over the availability of software updates. Taiwanese carrier Chunghwa Telecom Co., meanwhile, said it won’t procure new Huawei models.
This is an unfortunate time for a 5G handset manufacturer to suffer damage to its reputation, said CCS Insight analyst Ben Wood, who estimates the next generation of phones will make up over 30% of the roughly 18 million devices in the U.K. market next year.
“The problem is that even if all of this was fixed overnight, and the U.S. administration said, ‘Terrible mistake, it’s all fine, silly us,’ the uncertainty that it’s created is Huawei’s biggest enemy now,” he said.
Huawei phones developed and certified by Google before May 16 will still get access to Google’s Play app store and its preloaded apps and services. Updates from Google will continue as they are transactions between Google and end users, not Google and Huawei.
However, Google won’t be allowed to work with Huawei on software bugs and other technical fixes. Instead, the Chinese company will have to do this on its own, using the open-source version of Android.
Some owners of Huawei phones around the world took to social media to express concern over the potential effect on their handsets. Huawei’s marketing team assured customers their phones would continue to be safe and usable.
With U.S. allies under growing pressure to restrict Huawei, carriers have been reviewing their ties to the company and devising backup plans in case of bans or
supply disruption.
In addition, the U.S. is considering cutting off the flow of vital American technology to as many as five Chinese companies including Hangzhou Hikvision Digital Technology Co., widening the dragnet beyond Huawei to include world leaders in video surveillance.
The U.S. is deliberating whether to add Hikvision, Zhejiang Dahua Technology Co. and several unidentified others to a blacklist that bars them from U.S. components or software, people familiar with the matter said. The Trump administration is concerned about their role in helping Beijing repress minority Uighurs in China’s west, they said, asking not to be identified talking about private deliberations. There’s concern also that Hikvision’s or Dahua’s cameras, which come with facial recognition capabilities, could be employed in espionage, the people said.
Hikvision, Dahua and other companies have benefited handsomely from Chinese President Xi Jinping’s unprecedented push to keep tabs on the country’s 1.4 billion people. About 176 million video surveillance cameras monitored China’s streets, buildings and public spaces in 2016, versus 50 million in America, according to IHS Markit.
Hikvision — the industry leader — now sells its cameras around the world. Its devices use artificial intelligence, enabling them to conduct facial recognition on a vast scale.
Information for this article was contributed by Thomas Seal,Takahiko Hyuga, Lily Nonomiya, Debby Wu, Gao Yuan, Giles Turner, Deirdre Hipwell, Jenny Leonard and Nick Wadhams of Bloomberg News and by Jeanne Whalen and Griff Witte of The Washington Post.