Minus US Google, China's Huawei phones may be paperweights

Beijing: Google's restriction of business ties with Huawei, the world's No. 2 smartphone maker, could hit the demand for the Chinese firm's devices overseas by reducing them to be paperweights and give market leader Samsung a leg up in cementing its lead in Android devices, a media report said on Tuesday.

Rival phone brands Samsung, Xiaomi, Oppo would benefit from Google's suspension of services to Huawei, Hong Kong-based South China Morning Post reported. Last week, the Trump administration had placed Huawei and its affiliates on a blacklist, a move that essentially bans the Chinese firm from purchasing parts and components from American companies without the US government approval.

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 uses Google's Android operating system in its smartphones.

Huawei founder Ren Zhengfei Tuesday downplayed the impact of the US executive order against his firm, saying Washington "underestimates" the telecom giant's strength.

Google's move to curtail access to its Android operating system means that the Shenzhen-based company will no longer be able to run Google's popular apps and services such as Gmail, YouTube or its Google Play app store on future Huawei devices, the Post said.

For markets outside China, the removal of these critical Google services will mean that overseas consumers will think twice about buying Huawei devices in future. That is a big problem for Huawei, as about half of the 208 million smartphones it shipped in 2018 went to markets outside of China, it said.

"As far as overseas markets go, this move just turned Huawei's upcoming phones into paperweights," said Bryan Ma, vice-president of client devices research at IDC Asia-Pacific.

"The phones won't be very useful any more without Google apps on them, and other apps will be unable to call on Google Play services," the Post quoted him as saying.

Meanwhile, Huawei founder Ren Zhengfei Tuesday downplayed the impact of the US executive order against his firm, saying Washington "underestimates" the telecom giant's strength and other countries would take two to three years to catch-up with it in the next-generation 5G technology.

Speaking to state-run China Central Television, Ren, whose daughter and CFO of Huawei Meng Wanzhou has been arrested in Canada to face prosecution for violations of American sanctions against Iran, expressed his resentment over the ban.

"The current practice of US politicians underestimates our strength," Ren said.

"Huawei's 5G will absolutely not be affected. In terms of 5G technologies, others won't be able to catch up with Huawei in two or three years," he said.

"The US 90-day temporary licence does not have much impact on us, we are ready," Ren said. But at the same he admitted that half of chips used in Huawei equipment come from the US and the other half are made by the Chinese company.

"We cannot be isolated from the world. We can also make the same chips as the US chips, but it doesn't mean we won't buy them," he added.

Though rapidly expanding to become leader in 5G, Huawei is dependent on foreign suppliers.

According to estimates, Huawei buys about $67 billion worth of components each year, including about $11 billion from US suppliers.

Commenting on the development, Chinese Foreign Ministry spokesman Lu Kang told the media on Tuesday that "the US is using national means to oppress and smear certain Chinese company".

"This will serve no one's interest in the end. In international relations while doing trade we must follow the principle of equality and mutual benefit. We will defend our companies' legitimate rights and interests," he said.

Though Ren has put up a brave front, concerns mounted for Huawei as Google has barred the telecom giant from some updates to the Android operating system which could deal a big blow to it.