The Huawei Sanction Might Just Pop the Tech Bubble
This crisis is about much more than one company
Last week, Chinese tech giant Huawei was officially sanctioned by the United States. That effectively means U.S.-based companies are banned from doing any sort of business with the mobile phone giant moving forward. And this is just the beginning.
After the U.S. sanctions were announced, Google revoked Huawei’s Android license, which could leave millions of smartphone owners stranded without updates. The process has since been temporarily suspended with the Department of Commerce granting Huawei a surprise 90-day permit to support existing customers — but the reprieve only covers existing products, and the window seems unlikely to be extended.
Shortly after Google’s move, computer chipset maker Intel said it couldn’t sell laptop CPUs to Huawei, and a few days later, chip designer ARM announced it couldn’t sell the company smartphone CPUs — even though ARM is based in the U.K., which is technically beyond the reach of the embargo.
If any of these things happened in isolation, Huawei might have been able to weather the storm until one side of the U.S.-China trade war backed down. The Shenzhen-based company certainly seemed to have been planning for a scenario just like this, laying in a “stockpile” of supplies ahead of the ban. But it’s hard to imagine the company lasting the year without falling apart, unless there’s rapid political resolution — resolution that seems increasingly unlikely.
It’s entirely possible that Huawei might implode as a result of all of this — in a similar way to how rapidly the Chinese telecom company ZTE found itself near the brink of financial disaster in 2018, when it ended up on the same list. But no matter your stance on the company and the politics surrounding it, what happens next is likely to be bad for tech and the global economy. Huawei’s downfall might finally pop the bubble once and for all.
It might surprise you to learn that Huawei is in the top 10 most valuable technology companies by revenue, raking in a reported $105 billion in 2018 alone. This places it alongside companies like Microsoft and Google. The company…