Hong Kong (CNN Business)Huawei has taken a big hit from a US-led campaign against it, but a new reprieve will give the Chinese tech firm an opportunity to recover lost ground.
US President Donald Trump said over the weekend that he would lift some restrictions that barred American firms from selling critical tech and components to Huawei without a US government license.
The decision could help Huawei get its smartphone business, among the biggest in the world, back on track.
But the Trump administration’s restrictions, imposed on May 16, caused an immediate dent in the Shenzhen-based company’s international business. CEO Ren Zhengfei said earlier this month that Huawei’s global smartphone sales plummeted 40% between May 17 and June 16, compared to the previous 30-day period.
“Assuming that Google is not really a problem and gets the license to sell to Huawei, that’s a huge sigh of relief for Huawei,” said Bryan Ma, an analyst with research firm IDC.
Like most of the world’s smartphones, Huawei devices use Google’s Android operating system, which includes popular apps and services like Google Maps and Gmail.
Without access to that ecosystem, Huawei’s smartphones would be a lot less attractive to users outside of China, where most of Google’s popular products are banned. Roughly half of Huawei’s smartphone sales last year came from outside China, according to research firms Canalys and IDC.
For the last six weeks, international retailers and consumers were concerned about whether Google services and security updates would continue to be available on Huawei phones, according to Ma.
“Consumers obviously don’t want to buy a phone that doesn’t give them the service they want, and retailers don’t want to take on a bunch of inventory that can’t sell,” he said.
Google declined to comment for this article, referring to an earlier statement noting that the company is “engaging with the Department of Commerce to ensure we’re in full compliance with its requirements.”
Existing Huawei smartphones, which still have access to Google systems and software updates, could also be losing their resale value in key markets.
One of Huawei’s latest phones, the P30 Pro, sells for €999 ($1,130) in Europe. After Huawei was blacklisted, most traders were offering only €100 ($113) for the phone, according to Ben Stanton, an analyst with research firm Canalys.
“A lot of customers were quite keen to return devices or switch brands after learning the device in their pocket had dropped in value,” Stanton said.
Users “are now paranoid about those devices,” he added. “There’s a lot of brand building Huawei will have to do.”
Huawei has said it started stockpiling tech and components last year, anticipating Washington would slap it with an export ban.
At a press conference last week, rotating CEO Ken Hu said “in terms of where Huawei stands right now, our overall supply is not affected.”
Even if the company is able to buy all the US tech and software needed for its smartphone business, the US-led pressure campaign against Huawei will have lasting effects.
“Those retailers and consumers, their confidence is shaken. Now there’s second guessing, there are question marks around Huawei, is (a US export ban) going to become a problem again?” said Ma.
“The damage to Huawei, the scar, is still there,” he said.