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Huawei Faces Loss of Some Google Services After US Ban

Those who follow the industry closely say that it is unclear what damage, if any, will be suffered by Huawei

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    Huawei Faces Loss of Some Google Services After US Ban
    Ng Han Guan/AP
    A woman uses a smartphone outside a Huawei store in Beijing Monday, May 20, 2019. Google is assuring users of Huawei smartphones the American company's services still will work on them following U.S. government restrictions on doing business with the Chinese tech giant.

    Google said Monday its basic services on Huawei smartphones still will function following U.S. sales curbs, but the Chinese tech giant faces the possible loss of other features and support.

    The announcement highlighted the growing damage to Huawei from Washington's order. The company has said until now U.S. accusations it is a security threat have had little impact on sales outside the United States.

    Huawei Technologies Ltd., which uses Google's Android operating system in its smartphones, said it would continue to provide security updates and service. It gave no indication which map, photo or other services they might lose.

    The Trump administration's order targets China's first global tech brand and ratchets up disputes with Beijing over technology, trade and cyber-security.

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    Google, a unit of Alphabet Inc., said it is complying with and "reviewing the implications" of the requirement for export licenses for technology sales to Huawei, which took effect Thursday.

    "We assure you while we are complying with all US gov't requirements, services like Google Play & security from Google Play Protect will keep functioning on your existing Huawei device," said Google on Twitter.

    Google allows smartphone manufacturers to use Android and its basic services for free. But transfer of hardware, software or services to Huawei or technical interaction would be restricted by the U.S. order.

    That would strip Huawei phones of Google maps and other services that require direct support. That might hurt Huawei where consumers can pick other brands that carry the full suite of Google features.

    Those who follow the industry closely say that it is unclear what damage, if any, will be suffered by Huawei.

    Ben Wood, Chief of Research at CCS Insight, said it's unclear what Google told Huawei, but any disruption in getting updates to software would have "considerable implications" for its consumer device business.

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    "Google has publicly stated that its App Store, Google Play, and security updates from Google Play Protect will continue working on existing Huawei devices," Wood said Monday. "However, until we have a clear understanding of what exact measures Google has decided to take it is impossible to second guess the impact on future devices."

    The U.S. government says Chinese suppliers including Huawei and its smaller rival, ZTE Corp., pose an espionage threat because they are beholden to China's ruling Communist Party. But American officials have presented no evidence of any Huawei equipment serving as intentional conduits for espionage by Beijing.

    Huawei, headquartered in the southern city of Shenzhen near Hong Kong, reported earlier its global sales rose 19.5% last year over 2017 to 721.2 billion ($105.2 billion). Profit rose 25.1% to 59.3 billion yuan ($8.6 billion).

    Huawei smartphone shipments rose 50 percent over a year earlier in the first three months of 2019 to 59.1 million, while the global industry's total fell 6.6 percent, according to IDC. Shipments by industry leader Samsung and No. 3 Apple declined.

    Huawei defended itself Monday as "one of Android's key global partners." The company said it helped to develop a system that "benefited both users and the industry."

    "We will continue to build a safe and sustainable software ecosystem, in order to provide the best experience for all users globally," said a company statement.

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    A foreign ministry spokesman said China will "monitor the development of the situation" but gave no indication how Beijing might respond.

    The government said it would take steps to protect the rights of Chinese companies abroad following last week's announcement but has given no indication what it might do.

    "China supports Chinese companies to take up legal weapons to defend their legitimate rights," said the spokesman, Lu Kang.

    The U.S. order took effect Thursday and requires government approval for all purchases of American microchips, software and other components globally by Huawei and 68 affiliated businesses. Huawei says that amounted to $11 billion in goods last year.

    That could certainly create some collateral damage for U.S. companies.

    The California chipmaker Xilinx Inc. tumbled 5 percent before the opening bell Monday.

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    "We think that the US government action against Huawei creates risk for chip companies that might have high exposure to Huawei," wrote David Wong, an analyst with Nomura. "To our knowledge, Xilinx has never identified Huawei by name as a major customer that is driving its recent wireless strength. Nevertheless, Xilinx has undoubtedly been benefiting recently from strength in demand for chips used in 5G wireless base stations, and we think that action against a major maker of communications infrastructure equipment like Huawei likely poses risk for Xilinx."