Huawei's Chinese Phones Are Also American | WSJ

Summary

This video explores the impact of the US Commerce Department's blacklisting on Huawei, a Chinese smartphone giant. Despite being the world's second-largest smartphone seller, Huawei faces a potential loss of American software and parts, affecting its global user base. The ban could disrupt the supply of crucial components and software from US companies like Qualcomm and Google, potentially leading to reduced functionality and security for Huawei devices. The video also highlights the complex global supply chain and the challenges of doing business amidst geopolitical tensions.

Takeaways

• 📱 Huawei is the world's second-largest smartphone seller and is very prevalent in Asia.
• 🇺🇸 Despite being less common in the US, Huawei smartphones contain American software and parts.
• 🚫 The US Commerce Department has blacklisted Huawei, preventing American companies from selling technology to them.
• 🔍 Huawei has been accused of being a national security threat by the US government, which Huawei denies.
• 💡 Huawei smartphones rely on Google's Android OS and apps like Google Maps and Gmail, which may become unavailable due to the ban.
• 💻 US companies like Qualcomm, Intel, and Micron Technology are among Huawei's core suppliers, indicating potential negative impacts on them as well.
• 🏭 Many critical components of Huawei phones, such as Gorilla Glass by Corning and audio amplifiers by Cirrus Logic, are made in the US.
• 🌐 The situation exemplifies the complex nature of globalization and the unpredictability of the global supply chain.
• 🔄 Companies like Google, Skyworks, and Micron are responding to the ban by complying with the order and suspending shipments to Huawei.
• 🛠️ Huawei is attempting to mitigate the impact by stockpiling parts and developing its own operating system as an alternative to Android.

Q & A

What is the significance of Huawei's presence in the smartphone market in Asia?

Huawei is the world's second biggest seller of smartphones and is ubiquitous in places like Hong Kong, indicating its significant market presence in Asia.

Why are Huawei smartphones considered 'very American' despite not being common in the US?

Huawei smartphones contain software and parts familiar to American users, such as Google Maps, Gmail, and a scratch-proof screen made in the US.

What is the US Commerce Department's stance on Huawei?

The US Commerce Department has blacklisted Huawei, preventing American companies from selling technology to them, citing national security concerns.

What are the accusations against Huawei by the US government?

The US government accuses Huawei of being a national security threat and potentially aiding the Chinese government in spying through its products.

How much did Huawei spend on procurement from US firms in 2018?

Huawei spent approximately $11 billion on procurement from US firms in 2018.

What percentage of Huawei's core suppliers are US companies?

33 out of Huawei's 92 core suppliers are US companies.

What could be the potential impact of the US ban on American tech companies?

The ban could lead to a loss of revenue for American tech companies, as Huawei is a significant purchaser of their products and services.

Which American company provides the glass used in Huawei smartphones?

Corning, an American company, provides the Gorilla Glass used for the scratch-proof screen of Huawei smartphones.

What role does Cirrus Logic play in Huawei smartphones?

Cirrus Logic, a Texas-based company, provides the audio amplifiers that ensure loud and clear audio signals in Huawei smartphones.

Which company is responsible for the power amplifier in Huawei's latest model?

Skyworks, a Massachusetts-based company, makes the power amplifier crucial for maintaining network connectivity in Huawei's latest model.

What is the importance of Micron Technology's storage chips in Huawei smartphones?

Micron Technology provides the robust storage chips necessary for storing selfies, videos, and other data on Huawei smartphones.

How is globalization exemplified in the production of Huawei smartphones?

The production of Huawei smartphones involves components from various countries, including the US, Japan, France, Germany, and China, showcasing the interconnected nature of globalization.

What steps has Huawei taken in response to the US actions?

Huawei has been stockpiling parts and developing its own operating system as a substitute for Android in response to the US restrictions.

What could be the potential downside for Huawei users if US components are replaced?

The replacement of US components could result in hardware and software that may not be as high-quality, potentially affecting the user experience.

Outlines

00:00

📱 Huawei's Global Reach and US Blacklisting

This paragraph discusses the prevalence of Huawei smartphones in Asia, particularly in Hong Kong, and their reliance on American technology despite being less common in the US. It highlights the potential impact of the US Commerce Department's decision to blacklist Huawei, which could lead to the unavailability of US-made software and parts for future Huawei devices. Huawei is accused by the US government of being a national security threat, which the company denies. The paragraph also outlines the significant financial relationship between Huawei and US tech companies, with billions spent on procurement from US firms like Qualcomm, Intel, and Micron Technology.

Keywords

💡Huawei

Huawei is a Chinese multinational technology company that specializes in telecommunications equipment and consumer electronics. It is the world's second-biggest seller of smartphones. In the video, Huawei is portrayed as a major player in the global smartphone market, facing challenges due to US restrictions, which could affect its access to American technology and software.

💡US Commerce Department

The US Commerce Department is a government agency responsible for promoting economic growth. It has the authority to impose trade restrictions. In the context of the video, the department blacklisted Huawei, which led to a ban on American companies selling technology to the Chinese firm, affecting its supply chain and product offerings.

💡National Security Threat

A national security threat refers to any potential danger to a nation's security interests. The US government has accused Huawei of being such a threat, suggesting that Huawei's products could be used for espionage by the Chinese government, a claim that Huawei denies. This accusation is central to the video's discussion of the US ban on Huawei.

💡Blacklisting

Blacklisting is the act of placing an entity on a list that restricts its access to certain privileges or services. In the video, Huawei's blacklisting by the US government prevents American companies from exporting technology to Huawei, which could impact the availability of features and software on Huawei devices.

💡Globalization

Globalization is the process of increasing global connectivity and interdependence in economic, political, and cultural aspects. The video uses the example of Huawei's smartphone, which contains components from various countries, to illustrate how globalization has led to complex global supply chains that can be disrupted by political actions like the US ban.

💡Supply Chain

A supply chain is the network of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer. The video discusses how Huawei's supply chain is affected by the US ban, with American components like Gorilla Glass and chips from companies like Micron Technology being crucial to Huawei's smartphones.

💡Google's Android

Google's Android is the operating system used by Huawei smartphones. The video explains that due to US restrictions, future Huawei models may not automatically have Google apps installed, which could limit the functionality and appeal of Huawei devices to consumers.

💡Cirrus Logic

Cirrus Logic is a Texas-based company that makes audio amplifiers used in Huawei smartphones. The video mentions Cirrus Logic to highlight how specific American components contribute to the functionality of Huawei devices, and how the US ban could affect the availability of such components.

💡Skyworks

Skyworks is a Massachusetts-based company that manufactures power amplifiers for Huawei phones. The video uses Skyworks as an example of an American supplier that has had to suspend shipments to Huawei due to the US ban, impacting the company's ability to maintain the quality of its products.

💡Micron Technology

Micron Technology is an Idaho-based company that provides storage chips for Huawei's latest model. The video discusses how Micron, like other US suppliers, has had to stop shipments to Huawei, which could affect the storage capabilities of future Huawei devices.

💡Trade Blockade

A trade blockade is a restriction on trade between countries, often used as a form of economic or political pressure. In the video, the US ban on Huawei is described as a form of trade blockade that not only impacts Huawei but also American companies that rely on Huawei as a customer.

Highlights

Huawei is the world's second biggest seller of smartphones.

Huawei devices contain software and parts familiar to American users.

Huawei smartphones include Google Maps and Gmail.

US Commerce Department blacklists Huawei, affecting technology sales.

Huawei is accused of being a national security threat by the US government.

Huawei denies the accusations of being an instrument of the Chinese government.

Huawei could help the Chinese government spy, according to the Trump administration.

American tech companies won't be allowed to export crucial hardware and software to Huawei.

Huawei spent about $11 billion on US firms in 2018.

33 of Huawei's 92 core suppliers are US companies.

American companies will feel the impact of the trade blockade with Huawei.

Huawei smartphones rely on Google's Android operating system.

Future Huawei models may not have Google apps installed due to US restrictions.

Huawei will lose access to some security updates from Google after a 90-day grace period.

Corning provides the scratch-proof Gorilla Glass for Huawei smartphones.

Cirrus Logic makes audio amplifiers used in Huawei phones.

Skyworks makes power amplifiers crucial for phone connectivity.

Micron Technology provides storage chips for Huawei's latest model.

Huawei's components come from various countries including Japan, France, Germany, and China.

Globalization has led to companies being caught up in US actions against Huawei.

Companies like Google, Skyworks, and Micron are responding to the US order against Huawei.

Huawei has been stockpiling parts and building its own operating system.

Finding substitutes for US components will come at a cost for Huawei.

The impact will be felt by millions of Huawei phone users.

Transcripts

- If you wanna buy a cellphone in Asia,

you might come to a smartphone center like this one

here in Hong Kong.

You'll notice that Huawei is everywhere.

The Chinese company is the world's second biggest

seller of smartphones.

And although its devices aren't that common in the US,

they're actually very American.

This new model which the company lent me for this video,

contains software and parts that would be familiar

to any American smartphone user.

It comes with Google Maps, so I know where I'm going.

(bell rings)

I use Gmail to catch up on messages.

The scratch-proof screen is even made in the US.

But soon, these features and software could become

unavailable for millions of Huawei users

and that's because of a US Commerce Department blacklisting

that prevents American companies from selling it technology.

Huawei has been accused by the US government

of being a national security threat,

which Huawei denies.

- Huawei is an instrument of the Chinese government.

- The Trump administration has said that Huawei

could help the Chinese government spy using

its products including 5G equipment

and smartphones like this one.

This means that if the ban remains in place,

American tech companies won't be allowed to export

crucial hardware and software to Huawei.

That's everything from semiconductors to proprietary apps.

Out of $70 billion that Huawei spent on procurement in 2018,

about 11 billion was to US firms

including Qualcomm, Intel and Micron Technology.

Huawei also says it has 92 core suppliers,

33 of them are US companies outnumbering China's 25.

So although the exact impact on US companies

from this ban will be hard to predict,

we do know that the American companies will be feeling

the Chinese company's pain from this trade blockade.

Now let's have a look inside this phone

and see which American components go in it.

First, let's look at the software.

These are the apps and services

that people rely on everyday.

Huawei doesn't have its own operating system,.

So far its go-to has been Google's Android.

The suite of apps like Google Maps, Gmail and YouTube

have helped make Huawei smartphones globally popular.

But now with the US restriction,

future models of Huawei phones,

won't automatically have those apps installed.

Users of Google Maps and Gmail will have

to find open source alternatives.

Huawei will also lose access to some security updates

from Google after a 90-day grace period.

Potentially exposing them to software and threats.

There are thousands of little parts that make up one phone.

Again, many are made in the US.

Corning makes the phone's shiny glass body

called Gorilla Glass.

It gives Huawei smartphones that tough exterior.

It's also a popular brand among other smartphone makers.

Now, look inside.

The printed circuit board is like the brain.

It's an essential part of any electronic device

housing many of the most important components on the phone.

These are the audio amplifiers.

And they are made by the Texas company Cirrus Logic.

They make sure you get a loud and clear audio signal

when you're listening to music or receiving a call.

Massachusetts-based company Skyworks makes

the phone's power amplifier.

It's crucial for keeping your phone connected

to your carriers network so you can make calls

or stream your favorite show.

Every phone needs a robust storage chip

for your selfies and videos.

Huawei's latest model uses a chip

from the Idaho-based company Micron Technology.

There are plenty of other critical parts

that are made in the US, but the Chinese circuit board

also has components from Japan, France,

Germany and of course China.

For decades, globalization has pushed companies

to do business across borders.

This phone is just one example of how many companies

are now caught up in the US actions against Huawei.

And how unpredictable doing business

in the global supply chain can be.

We reached out to these companies for comment.

Google said it's complying with the order

and reviewing the implications.

Skyworks told us it's suspended shipments to Huawei.

Micron said it's done the same and it's also evaluating

the impact on its business.

Others didn't respond to our requests.

Huawei has been under fire from the US government

for a while now and the company has been stockpiling parts.

Even building its own operating system to replace Android.

While Huawei may be able to cope by finding substitutes

for its US components, it'll come at a cost.

Likely in the form of hardware and software

that's just not as good.

The ones who notice the difference

will be the millions of users of Huawei phones.

(soft music)