Three days ago, The US blacklisted Chinese-based smartphone manufacturer, Huawei. At this current point in time, Huawei is the second largest smartphone manufacturer in the world. Behind Samsung and ahead of Apple. A few weeks back there were some concerns that technology bought by US companies from Huawei was being used by the Chinese government to spy on them. And due to those possible concerns, the US decided to place Huawei on a blacklist via executive order by President Trump. Not allowing US based companies to interact with them. And this might seem like a security move for the US. However, this is most likely a power play in the on going trade war between the US and China. And America just dropped the bomb. Making headlines that the tech industry hasn't seen in quite a while.
Huawei is most notably known for their smartphones, which run on Android. Android is an Operating System developed by Google, an American based company. So due to the ban, Google was forced to cut ties with one of their highest selling smartphones. Hurting an American business. Because of this Huawei will have to run on a different OS (operating system). And this OS will not have access to the Google Play app store or any American based apps. Including Facebook, YouTube, Instagram, Snapchat, Twitter, Netflix, Pandora, Uber or any other US based app. The apps I just listed are on everyone's phone. And now millions of people wont have access to those platforms that we use everyday. And because of this, millions of customers will no longer use Huawei's phones. And those that will, can't use those apps. Which, of course, hurts American businesses.
Huawei also manufacturers laptops which run on Windows. And since Windows is an American business, Huawei's laptops will not be able to run on Windows. And again, that is a significant blow to another American business.
Huawei generally has a budget of around 70 Billion. And 11 Billion is spent on buying components from American businesses including Qualcomm, Micron Technology, Intel, Corning, and Sony. All American businesses that are going to lose out by not being able to sell to the second largest smartphone manufacturer in the world. By now you get the point, this hurts more American companies.
However, the biggest blow has fallen on US consumers. I'm a big believer in capitalism. It may not be the perfect system, but I do believe it is the best out there. It allows natural collaboration and competition. Which leads to innovation. With a massive player out of the space. There is less incentive for other smartphone companies to improve. Especially in the 5G department. Huawei was the industry leader in 5G and now customers will have to wait longer for better speeds and stronger connections. We constantly saw other major smartphone brands take inspiration from Huawei and implement their technology.
With the giant blow to China from the ban. China has begun to threaten the US by threatening to cut-off the US from rare-earth materials, which China dominates in production. These rare-earth materials are needed for the functioning of oil refining, batteries, consumer electronics, defense, and more. If this trade war continues. It could have a devastating impact.
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