Can Huawei survive? Yes but how much damage to the economy will be done...

Can Huawei survive? Yes but how much damage to the economy will be done…

It is the season of debates in the U.S. which in reality is an odd mix of shouting matches, ill-mannered behavior and dodging critical questions. In the midst of this, I received an invitation from Elise Quevedo to watch an interesting debate online about if Huawei can survive, despite the many challenges the company faces around the world. My friend and fellow countryman Edwin Diender wrote me as well, telling me that he was really looking forward to this.

When Elise invites for a party, I show up because I know that there is always action. And when Edwin recommends it, I even put on my virtual dancing shows. My only question was if Elise would be able to succeed where professional moderators in political debates fail completely: make it a cultivated conversation with all the pros and cons. Was I in for a pleasant surprise! Here is part 2.

Is Huawei involved in espionage by the Chinese Government?

This is the biggie, the real joker in the poker game. Something of a full-house and royal flush rolled up in a single hand. And in fact, the most laughable one in the chain of anti-Chinese and anti-Huawei propaganda coming from Washington D.C. Not only because there is not a single shred of evidence to substantiate these claims even remotely. Most of all because these claims come from a country and administration that has granted itself legislative powers to spy on each and everyone worldwide, and force each and every U.S. based company and citizen to collaborate by something as simple as being subpoenaed by a secretive court, if not already part of the blanket intrusive “just in case we need it later” surveillance.

On top of the already existing global intrusive mass surveillance, the U.S. administration and its Five-Eyes partners are seeking the powers to get backdoors in all kinds of encryption available on the market. Yes, you read that right. The last stronghold of privacy will be taken too when this administration gets their way. Imagine the headlines when the U.S. would serve Huawei a subpoena to implement backdoors in its devices, software, and infrastructure…

None of this is about Huawei being involved in espionage. All of this is about the fact that the legislative powers the U.S. uses massively to spy on everyone, including Huawei (!), do not apply to legal entities which are not based in the U.S. Why else do you think that it was “a matter of national security” to force ByteDance to handover its TikTok business and technology to a U.S. based corporation? This is just to make sure that the U.S. continues to have the monopoly over electronic espionage, of which we know since the Edward Snowden revelations that it uses it unrestricted and at will.


Although the Huawei Debate was very interesting and gave some important insights from all sides of the equation, I believe that it was created around the wrong question. Will Huawei survive? You bet your sweet bippy that they will. This is not and will never be the real question to ask. Huawei was created against the odds. A simple service provider in the China of the 80’s, working for a British company based in Hong Kong, it was at the bottom of the chain. And it worked its way up from there, against the odds. Overcoming hurdles is not only part of the Chinese genes, it is the foundation of global technology leader Huawei.

Yes, as long as the U.S. administration keeps tightening its grip on China, Chinese Companies and especially Huawei, there will be negative impact. One could call it choking but it will not have the suffocating effect Mr. Trump was hoping for. Huawei will find its way. It always did and will continue to do so. There is another very important question to be asked.

Will the U.S. economy suffer under the anti-China policy?

Let us just take a closer look at Huawei and what it means for the U.S. economy. The smartphones are just one product range in the portfolio of Huawei, and they are also the most sold smartphones worldwide. Until the sanctions frenzy kicked in, these devices were powered by Google’s Android and its app eco-system Google’s Play Store which is tied to Google Pay. Not anymore! Huawei recently launched its own mobile OS and app eco-system, and due to the popularity of its devices, the major app providers are rushing over not to miss out on the undisputed biggest market share in smartphones. Banning Huawei from Android turned Huawei from being the largest contributor of the entire Android ecosystem into the largest competitor of that ecosystem…

No matter how fancy the software market is, none of that would even exist without semiconductors and these semiconductors play a major role in Huawei’s business. Boom, enter sanctions on supplying Huawei with semiconductor technology and parts. Apparently intended to slow down the high paced innovation, it is actually punishing the U.S. semiconductor industry. Yep, Huawei was a large customer of those mainly U.S. companies but not anymore. Will this slowdown Huawei? Most certainly but it will also incentive a process which Huawei masters like no other. Being its own demanding customer!

To operate its global business efficiently, Huawei needs cloud power and U.S. cloud providers are bloody expensive from a Chinese perspective. From having a demand to becoming the 6th largest cloud provider globally is just another nudge in the success story of Huawei. It has become close to impossible to design high-end technology without artificial intelligence, so Huawei launched its AI business and is rocketing towards being a Top 5 global supplier. Its modular data center components are the Nr. 3 worldwide, leaving many of the big names far behind them. All this tech consumes a lot of electricity, so no surprise that Huawei entered the renewable energy market and within just a few years became a major player on the European and Asian markets.

Being cut-off from key semiconductor supplies including crucial software to design and simulate new semiconductors, Huawei will most likely do what is has always done and done very well: become its own demanding customer. It will not take long until Huawei will have developed its own special software tools to drive the development of badly needed chips and processors. Machine development to produce parts is already on its way by the many Chinese companies which have been doing so for decades, and for the record, export those machines to the U.S…

What remains is a policy based on the illusion that “trade wars are easy to win”, and tariffs and counter-tariffs. In the past decades, the U.S. has tossed away most of its manufacturing capacity and stopped investing in the infrastructure to be able to manufacture and ship its products, if it would have any worth exporting. Not only its consumption driven economy depends on cheap and fast supplies from Asia including China, also the majority of its profit driven corporations depend on supplies from China. Supplies from China which are now more expensive due to tariffs, or in a growing amount of cases even completely blocked or severely restriction due to sanctions.

Who pays the bill for this? U.S. consumers! From furniture to clothing, from technology to car parts, you name it, and U.S. companies import it from China to supply the demanding consumer market. Congratulations, stuff just got a lot more expensive! All in all, those who suffer the most under the Trump Tariffs and Sanctions are the U.S. economy and the U.S. consumers. For Huawei this is an unexpected, unwanted, and unfair detour, but nothing more than that.


All this reminds me of a statement by Mr. Wisse Dekker, the former President of Phillips – “Innovation never comes from politicians and lawyers. Innovation comes from designers, engineers, and entrepreneurs.” and at the same time I keep thinking about a famous statement by Mr. Yitzhak Rabin after signing the Oslo Accords – “One does not make peace with ones friends, one makes peace with ones enemies.”.

I can understand that this U.S. administration feels threatened by its inability to enforce its legislative and economical powers globally. Partnerships and collaboration do not seem to be part of their vocabulary and thinking. Disabling China as technology and economical superpower might have been still an option 2 decades ago but it is too late for that. Especially because most U.S. corporations have shifted in full Made in China mode to increase profits. Even most Trump merchandise is made in China…

And it is not just China that refuses to be a colonized subject of the U.S. administration and economy. The European Union is fighting back with all it got and that turns out to be significantly more than this U.S. administration apparently expected. Its Big Tech Giants get subpoenaed by the European Court of Justice for all thinkable and unthinkable abuses of privacy and security breaches. The same ECJ torpedoed the Privacy Shield Agreement because of the intrusive unrestricted mass surveillance practices of the U.S. And U.S. tariffs are countered by equal tariffs, creating a level playing field in which the U.S. no longer can flex its muscles to get what it wants like it did in past.

The U.S. can of course continue to attempt to enforce its way like it has been doing in the past 4 years and find itself only further alienating its partners and allies. Although it succeeded in muscling the United Kingdom into voiding its independence by banning Huawei in the faint hopes of a trade deal with the U.S., even Mr. Boris Johnson is already expressing growing frustration with the lack of real progress in that trade deal. Some other European nations have also given in to the pressure from Trump’s “CLEAN network” campaign like for example Belgium and they will soon learn that by doing so they have made innovation slower and more expensive, just for the sake of boosting U.S. tech corporations.

Alternatively, the U.S. could return to the global stage as a reliable partner and ally. Tough and loud like they will always be, and with a clear desire to be a global superpower. To do so, they need to accept that they are no longer the only superpower around. We have learned from the Battles of the Superpowers during the Cold War and I do not believe that anyone who lived during that period is willing to return to that, especially not in Europe.

The corporations? They should embrace innovation and competition! Do it like for example Huawei and Ericsson, by continuously pushing each other to new heights. As advocate for sustainability I celebrate their race to deliver energy efficiency for their mobile technology. Each and every update pushes the efficiency bar even further, followed by another improvement from the other side. E-waste is an enormous global problem. Bless them both for implementing programs to resell, repurpose and when needed recycle phased-out equipment and devices. Yes! Keep doing that, please!

The same happens on the global smart phone market. Each product release delivers something which is just a bit better than what the competitors have to offer. Having the best device on the market is a title which is valid for only a few weeks, at best. Someone will release a product which is better. Not a lot, but enough to grab the title. That is how innovation works! Not with sanctions and tariffs…

A lot depends on the outcome of the coming presidential elections. Will the U.S. continue its aggressive foreign and protectionist economic policies, or will it start repairing relationships on the international stage?

From my vantage point the real question is this: how much more self-inflected damage to its own economy will the U.S. cause?

Read Part 1:

2 thoughts on “Can Huawei survive? Yes but how much damage to the economy will be done…”

  1. Pingback: Can Huawei survive? Wrong question! | Dr. ir Johannes Drooghaag

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