Visitors pass in front of Huawei's position on the first day of the Mobile World Congress in Barcelona on February 27, 2017 in Barcelona.
Lluis Gene | AFP | Getty Images
Huawei claimed Thursday that attempts to limit the Chinese tech giant from doing business stateside will lead to the US ending up in the development of the next-generation mobile network – and may raise "other serious legal issues".
On Wednesday, President Donald Trump wrote an executive order that gives the government authority to block transactions involving information or communication technologies that "pose an unacceptable risk to US national security".
According to the regulation, technology that can be blocked will be the one that is "designed, developed, manufactured or delivered by persons owned, controlled or covered by a foreign opponent's jurisdiction or direction".
While Huawei is not named in politics, the United States has long accused the Chinese telecom equipment manufacturer of having close links with the Chinese government's Communist Party. Washington has also claimed that Huawei's telecom equipment constitutes a national security risk as it can be used by Beijing for espionage. Huawei has denied all these claims.
In a statement to CNBC on Thursday, Huawei said that further steps to block it from the US market could have a detrimental impact on the country's development of 5G technology.
"Huawei is the unparalleled leader in 5G. We are ready and willing to engage with the US government and provide effective measures to ensure product safety," a CNBC spokesman said.
"Restricting Huawei from doing business in the US will not make the US safer or stronger; instead, this will only limit the United States to worse than more expensive alternatives, causing the US to lag behind in 5G deployment and eventually harms the interests of US companies and consumers, the statement says. "In addition, unreasonable limitations to violating Huawei's rights and the cause of other serious legal problems." To support new technology as a driver without a car, which requires large amounts of data to be transferred.
The United States and China are struggling to dominate in the 5G because technology is seen as crucial to the future of both countries' infrastructure. little influence globally and trying to block Huawei and its competitor ZTE is a key Part of that strategy.
Huawei has often argued that banning the provision of telecommunications equipment to any country would reduce competition there. Experts have told CNBC that the US could find alternatives, namely Nokia and Ericsson, but other countries, including in Europe, could suffer.
US Abusive Power
Both Huawei and the Chinese government have issued strong statements against the United States in recent months.
"For some time, the United States has abused its national power to strain the image of and suppress specific Chinese companies, which is outrageous and unfair," said a Chinese Foreign Ministry spokesman on Wednesday before Trump's upcoming executive order was announced. [1
Huaunda's founder and CEO Ren Zhengfei told CNBC earlier this year that the United States was "afraid" of its company.
It is unclear how far the outcome will be for Huawei. The company has been relatively absent in the US market for several years.
In 2018, only 6.6% of its revenues came from America, most of which comes from Latin America according to the company's latest financial results.  It also appears to have had a strong start to the year with a turnover of 39% compared to the first quarter of 2019. Huawei released the quarterly result for the first time this year.
Trust in other companies
] However, a greater concern may be a step from the US to add Huawei to the Office of Industry and Security, so-called Entity List. This means that US companies must obtain permission from the agency to sell or transfer technology to Huawei. The Chinese company relies on some components from US companies such as Intel and Qualcomm for smartphones and laptops.
In addition, Huawei's consumer business is now the largest division of revenue and is seen as an important growth driver for the company. Any disruption to the consumer group can affect its overall business.
But in recent years, Huawei has designed its own chips for its smartphones to reduce dependence on other companies. It has a series of processors, known as Kirin, and a modem, called the Balong 5000, which allows devices to connect to 5G networks.
In 2018, 73% of Huawei's smartphones contained the company's own chips according to IDC data. Another 10% were from Taiwanese firm MediaTek, and the remaining 17% were from Qualcomm – but these were mainly for lower end $ 200 phones.
"Although Qualcomm, for some reason, can't deliver to Huawei, I'm sure MediaTek would be more than happy to get its business right to give its expertise in low-end devices," says Bryan Ma , vice president of unit research at IDC, told CNBC.
However, Huawei is dependent on US components for its networking equipment and there may be major concerns, Ma added.