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Home / Business / Huawei's biggest problem is now uncertainty, analysts say

Huawei's biggest problem is now uncertainty, analysts say



In this illustration, the Huawei logo and Chinese flag are displayed on an Android mobile phone.

Omar Marques | LightRocket | Getty Images

The US Government's temporary restraint on Huawei may lead to little respite for the Chinese telecommunications giant, according to analysts.

On Monday, the US government announced that it would allow Huawei to buy US merchandise to maintain existing networks and provide software updates to its existing handsets, although the company is still unable to buy US parts and components to produce new products. without approval approvals that are likely to be denied.

This development was not game-changing news, experts CNBC said.

"This is not going to change overnight in the form of fortune for Huawei," said Nicole Peng, vice president of mobility at independent analyst firm Canalys.

"The biggest problem for them right now is the uncertainty," Peng said, adding that Huawei's suppliers are concerned with business continuity given their growing confidence in the Chinese technological giant over the past year.

The latest developments came to the back of US President Donald Trump's administration added Huawei last week to a list that included a license for stateide companies to do business with the Chinese company.

Who led Google's alphabet to suspend business with Huawei involving hardware, software and other technical services. Bloomberg News also reported that companies like Intel, Qualcomm and Broadcom will not deliver Huawei until further notice.

The "snowball effect" started by Google probably "forced" the Trump administration to retreat from its stance, analyst Anshel Sag said on Moor Insights & Strategy. He added that the current situation "clearly looks political and related to the trade war."

For its part, Huawei has been faithful. The company's founder, Ren Zhengfei, told the Chinese government agency CCTV on Tuesday that "US governments are currently underestimating our capabilities," according to a print released by the withdrawal.

Ren said that Huawei was in violation of the US government, not US companies, and that Huawei is capable of making chips it buys from the US ̵

1; even if that doesn't mean it will stop buying US chips.

"I don't necessarily see Huawei's changing courses," said Sag. "Finally, Huawei knows that what is best for their business is to act as if this 90-day break is not a break at all."

For its part, Google said in a statement that the temporary pause allows the US tech giant "to continue providing software updates and security updates to existing (Huawei) models for the next 90 days."

Who stands to get

When Huawei's assets hit a road clock, the discussion has shifted to who can stand to benefit from most of the situation.

"The biggest long-term winner will be US IT companies, but in the short term, the tension between two countries will allow Korea," said Daniel Yoo, global strategy leader and research at Kiwoom Securities, CNBC told an email.

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In the smartphone segment, where Huawei was among the few companies that see annual growth in shipments as sales slow down, South Korea's Samsung Electronics would be a recipient, Yoo said. Data from Canalys showed that Samsung's annual growth in worldwide smartphone shipments decreased by 10% in the first quarter of 2019, while Huawei increased by 50.2%. In the same period, the US technology giant Apple smartphone growth joined 23.2%.

Canalys & # 39; Peng agreed that Samsung has "the most overlapping" of product and segment with Huawei.

Case offered another thank you, saying that Huawei's domestic competitors Vivo and Oppo could have the biggest upside from the telecommunications giant's vulnerability.

Huawei grows most in Europe, he said, a region where the two Chinese brands become "more aggressive" and consumers are more dependent on Google's ecosystem.

– CNBC's Fred Imbert, along with Reuters, contributed to this report.


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