United States Extended the Ban on Huawei’s “Breathing” for 90 Days

  • Earlier, Trump also said that the United States will not do business with Huawei for the time being.
  • Many Huawei suppliers have requested special licenses to continue to supply to Huawei.
  • Trump regards economic growth as the main program for the 2020 election, but if the economy declines he will have a hard time convincing voters that he has achieved economic success.

Reuters quoted two sources saying that the US Department of Commerce will extend the time for Chinese technology giant Huawei to purchase US corporate products. It is expected to be extended for another 90 days. If the ban is strictly enforced, it will seriously affect Huawei’s supply chain. However, it may also strike against US customers that Huawei is serving and suppliers that supply Huawei. In view of this, the United States proposed a delay in implementation shortly after the ban was issued.

Huawei Technologies Co. Ltd. is a Chinese multinational technology company, providing technological equipment and consumer electronics. It is the largest telecommunications equipment manufacturer in the world, and the second-largest smartphone manufacturer, behind Samsung. Huawei has been heavily criticized for cybersecurity concerns and surveillance usage by the Chinese government.

The United States will officially announce on Monday whether it will extend Huawei’s “temporary comprehensive authorization.” The day before, Trump told reporters that it seems that he will not do business with Huawei. “I don’t want to do business with Huawei because it is about national security,” Trump said that a small part of Huawei’s business is free from bans, but things can become “very complicated.” He did not directly say whether it would be postponed.

Earlier, Trump also said that the United States will not do business with Huawei for the time being. But at the time, Reuters quoted White House officials saying that the comment only referred to the federal government’s ban on the purchase of Huawei equipment. On the same day, the White House sent a different signal. Larry Kudlow, director of the White House National Economic Council, said that the US Department of Commerce will extend its authorization to Huawei for three months to show “sincerity” on the occasion of comprehensive trade talks with China.

Agillic CEO Mike Weston said that the move is not only critical to Huawei, but also to billions of orders for the US. Therefore, the ban on Huawei also faces opposition from the United States. As the world’s second-largest mobile phone manufacturer, Huawei imports about $11 billion in parts and materials from US suppliers every year. Sudden interruptions will hit businesses related to US companies.

In finance, the yield curve is a curve showing several yields or interest rates across different contract lengths (2 month, 2 year, 20 year, etc. …) for a similar debt contract. The curve shows the relation between the (level of the) interest rate (or cost of borrowing) and the time to maturity, known as the “term”, of the debt for a given borrower in a given currency. For example, the U.S. dollar interest rates paid on U.S. Treasury securities for various maturities are closely watched by many traders, and are commonly plotted on a graph such as the one on the right which is informally called “the yield curve”.

Many Huawei suppliers have requested special licenses to continue to supply to Huawei. US Commerce Secretary Wilbur Ross told reporters at the end of last month that he has received more than 50 applications and is expected to have more. Mike Weston reminded that even if the business between them recovers, Huawei will try to divert orders in the US to reduce potential risks in the future.

The broader pressure comes from an overall recession. Last week, US 10-year Treasury yields fell below of 2-year Treasury yields, which usually means a sharp increase in the risk of a recession. Trump regards economic growth as the main program for the 2020 election, but if the economy declines, he will have a hard time to convince voters that he has achieved economic success.

On May 16 this year, the United States listed Huawei on an “entity list,” which means that Huawei will not be able to purchase parts produced by US companies. Intel, Qualcomm, Xilinx, and Broadcom have sent employees a notice to suspend supply of products to Huawei. These US companies provide Huawei with baseband chips, RF chips and storage products. It’s not easy to find alternatives to these core components. After the inventory of components are exhausted, the production schedule will be seriously affected.

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Joyce Davis

My history goes back to 2002 and I  worked as a reporter, interviewer, news editor, copy editor, managing editor, newsletter founder, almanac profiler, and news radio broadcaster.


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