Huawei, a company based in China, is looking to avoid US trade sanctions by licensing its smartphone designs to other companies.
In May 2019, Huawei was banned from all U.S. businesses with a supply chain due to a long and troublesome chain of events caused by some of which date back to 2018. While this Chinese company still has an active market presence in the US, it lost the ability to sell phones with US-owned intellectual property that is included in hardware by Google and Qualcomm.
In a bold move last summer, Huawei sold Honor’s subsidiary to avoid US trade restrictions. This led to a win-win situation as the two companies made their way back onto devices. Bloomberg reports that Huawei has developed a plan of action to thwart the US ban on the company’s products. The solution? Licensing their smartphone designs to companies outside of China. Huawei recently announced it would be looking for partners to turn its smartphones into commercial products. China Postal & Telecommunications Appliances Co, as well as a telecom manufacturing company, are both prime candidates.
This would allow Huawei to use Qualcomm chipsets and Google’s Mobile Services on their licensed devices, which they wouldn’t be able to do without this workaround. Instead, the company will release its own branded smartphones that are built with Huawei components.
Will it work?
It’s hard to know the impact of this move without hiring two dozen tech lawyers. It may have worked out in the beginning but now it faces similar repercussions as its former parent. Fourteen Republican members of the House and Senate asked the US Commerce Department to apply sanctions on Huawei and Honor like those imposed on Huawei, which was later blocked by a court order.
In a letter from the five Republican representatives from the United States of America, they express discontent over Huawei’s decision to sell Honor as it would allow them to evade US export control policies for hardware-software or any other products that might fall into the hands of the CCP.
“Last month, Republican U.S. senators led by Marco Rubio again urged the Biden administration to blacklist Honor, describing the company as an ‘arm’ of the Chinese government and a threat to national security.” It is becoming more and more difficult for Huawei to find business partners, but given the current situation, there are no guarantees that other companies won’t make the same decision.