Google Restricts Huawei's Access To Android Systems After Trump Ban

May 20, 2019
Originally published on May 20, 2019 4:43 pm
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MARY LOUISE KELLY, HOST:

The Trump administration gave a little ground today in its dispute with Chinese tech giant Huawei. It is backing off on restrictions placed on the company less than a week ago. The Commerce Department had barred U.S. companies from doing business with Huawei unless they received a special license. The idea was to hurt Huawei, but U.S. tech company stocks were caught in the crossfire. NPR's Jackie Northam has been following developments. She's back in the studio. Hello again, Jackie.

JACKIE NORTHAM, BYLINE: Hi, Mary Louise.

KELLY: All right. So why is the Commerce Department backing off these restrictions so quickly, just put in place in the last week?

NORTHAM: Right. Well, they are backing off. It's a 90-day reprieve. So in other words, Huawei can continue to buy components from U.S. companies, whether it be computer chips or software, anything like that. Analysts told me that it was the U.S. tech companies that were going to take a beating here because they have so much business with Huawei and that they've been passing on that message to President Trump that they were going to get hit hard.

Stocks in two major computer chip companies - Qualcomm and Broadcom, two major ones - were down 6% today. Google dropped 2%. And this was after Google said it would stop supporting Android devices for phones made by Huawei because the company was on the Commerce Department's blacklist. Google is a major software provider for Huawei. And if these restrictions went on for months, Google could take a beating.

KELLY: Correct me if I'm wrong here, Jackie, but didn't the U.S. back off last year in a somewhat similar way shortly after blacklisting another Chinese telecom company?

NORTHAM: That's right. It was a company called ZTE, and they were on the blacklist. And it went on for a while. And they were on the verge of bankruptcy. And this is a major Chinese corporation - almost went bust until the Trump administration reversed that decision and allowed U.S. companies to supply it again. So it's the same sort of scenario. But, Mary Louise, the Trump administration has been tightening the screws on Huawei for months now in part because it has links to the Chinese government.

And U.S. intelligence agencies believe Huawei could use its equipment to spy on the U.S. and its allies. The administration asked Canada to arrest and extradite one of Huawei's senior officials. And administration officials have been fanning out across the world asking allies, pressuring allies not to use Huawei equipment. So up until now, it's been a full-court press by the administration to contain the company.

KELLY: Yeah. It sounds like a fascinating back-and-forth, how to hurt Chinese companies without harming U.S. companies in the balance. I mean, you could have described this until a few hours ago, as it sounded like almost all-out war between the U.S. and Huawei. Are we now at a 90-day truce?

NORTHAM: Maybe a cease-fire. The decision to blacklist Huawei was seen by many - in the beginning, anyway - as a bargaining ploy in the overall trade war between China and the U.S., where there are increasing tariffs on each other's products. And it was seen as an effort to gain leverage over Beijing. One analyst I talked to just in the past couple hours says easing the restrictions on Huawei now may be an opportunity for both sides to save face and get back to the negotiating table. But we'll see if that works.

KELLY: Yeah. And again, 90-day truce. What reason do we have to think that the U.S. will be in a stronger position 90 days from now?

NORTHAM: It's hard to say. Huawei is an enormously powerful company. You know, it's the second-largest supplier of smartphones in the world. It passed Apple last year, and it was on its way to pass Samsung as well. So again, this is a very powerful company. So, you know, it has its own bargaining chips. Let's put it that way.

KELLY: NPR's Jackie Northam reporting. Thank you, Jackie.

NORTHAM: Thank you, Mary Louise. Transcript provided by NPR, Copyright NPR.