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Business Management

How a Washington crackdown on Huawei could backfire for everyone

A full-on tech trade war between the United States and China just got another step closer after Washington opened an investigation into whether Huawei broke US sanctions on Iran. The US Department of Justice has already slapped tariffs on $60 billion worth of Chinese steel and aluminium, with China raising tariffs on US goods in response, but punishing Huawei could have more serious repercussions.

Imagine the panic in US tech boardrooms if the world’s number one manufacturer of electronic components decided to ban or restrict exports to America. All bets are off in this new high-stakes geopolitical stand-off. In the longer term, these retaliatory measures could even accelerate China’s metamorphosis into a self-sufficient tech powerhouse.

 

Will Huawei suffer the same fate as ZTE?

The Justice Department investigation into Huawei recalls a similar probe into whether Shenzhen rival ZTE broke US sanctions by exporting devices containing American components to Iran. ZTE was found guilty last year not only of breaking the sanctions, which resulted in an $892 million fine, but of breaking the settlement deal’s terms by failing to punish those involved. The resulting seven-year ban on US firms selling to ZTE will severely hamper its growth efforts because it relies on chips and other components from the likes of Qualcomm and Micron Technology.

Apple and China tech news stories could have wider implications, not just for IT buyers, but the global economy. Could Huawei smartphone deal fail spell full-blown Sino-US trade war?

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Phil Muncaster

Phil Muncaster has been writing about technology since joining IT Week as a reporter in 2005. After leaving his post as news editor of online site V3 in 2012, Phil spent over two years covering the Asian tech scene from his base in Hong Kong. Now back in London, he always has one eye on what's happening out East.

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