UPDATED 20:51 EDT / AUGUST 19 2019

POLICY

Huawei gets another 90-day reprieve before US technology ban takes effect

The U.S. Commerce Department has granted another stay of execution to Chinese technology giant Huawei Technologies Co. Ltd. that will allow it to continue buying components from U.S. companies until November, Reuters reported Monday.

The extension, which was announced by U.S. Commerce Secretary Wilbur Ross, comes just a day after President Donald Trump suggested that no such reprieve would be granted.

The U.S. government added Huawei to a list of “banned entities” that are prohibited from doing business with American companies in May. Huawei was blacklisted over concerns that it’s involved in activities contrary to U.S. national security and foreign policy interests, which stemmed from fears that its equipment could be used to spy on American companies and citizens.

The U.S, has never provided any proof of these claims, and Huawei argues the ban is politically motivated and designed to give the Trump administration more leverage in its ongoing trade war with China.

Shortly after the ban was announced, the Commerce Department granted Huawei a 90-day stay of execution in a move it said was designed to “minimize disruption” for its customers. Huawei’s U.S. customers include a number of local telecommunications companies that use the its equipment in their networks.

The new reprieve is also meant to aid these customers, Ross said.

“As we continue to urge consumers to transition away from Huawei’s products, we recognize that more time is necessary to prevent any disruption,” he explained in a statement announcing the latest reprieve.

The latest reprieve may also be a result of pressure from some U.S. computer chipmakers, which have lobbied against the ban, arguing that it harms American companies.

Huawei said in a statement that the new extension “does not change the fact that Huawei has been treated unjustly” and said the decision “won’t have a substantial impact on Huawei’s business either way.”

Despite the new reprieve, the Commerce Department also cranked up the pressure on Huawei by adding 46 of its affiliate companies to its list of banned entities. More than 100 Huawei affiliates, from countries including Argentina, Australia, Belarus, China, Costa Rica, France, India, Italy, Mexico and others, are now banned from dealing with U.S. firms, Reuters said.

Huawei had some harsh words about this decision too: “It’s clear that this decision, made at this particular time, is politically motivated and has nothing to do with national security,” it added in its statement.

Analyst Patrick Moorhead of Moor Insights & Strategy said the latest maneuverings are really just a negotiation of sorts between the U.S. and China.

“Banning Huawei purchases could destroy the company and I don’t think the administration wants to do that,” he said. “What Washington wants is equality on both sides, which means for China to stop stealing intellectual property, allow U.S. companies to participate in its markets, and to correct the trade imbalance.”

Holger Mueller, an analyst with Constellation Research Inc., agreed that Huawei has effectively become a “pinball” in the U.S./China trade dispute.

“The 90-day extension just keeps the lights on,” Mueller said. “In the meantime it also gives Huawei more time to prepare for a Plan B from the supply chain side.”

Indeed, Huawei is wasting no time in putting its Plan B into action. Last week the company announced plans for a three- to five-year overhaul of its businesses that’s designed to overcome the technology ban, mainly by reducing its reliance on foreign components and software.

As part of that plan, the company recently announced its own, internally built operating system, called HarmonyOS, which could one day replace Android on its smartphones.

Photo: Laboratorio Linux/Flickr

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