Huawei could end up challenging Google

More details  surface on  Huawei's planned  rival to Google's Play Store TechRadar

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BY imposing restrictions on Huawei Technologies Co, the administration of US President Donald Trump may force the Chinese company to do something that no one in tech has dared to do for a long time: Challenge Google’s control of the Android universe, which earned the US company a huge European fine last year.

Huawei faces two big threats from US technology export restrictions. One is the loss of American components for its products, a blow it cannot parry immediately if it wants to keep making top-flight smartphones.

The other is the potential withdrawal of its Android license, which would stop Huawei from preinstalling the latest Google-approved version of the operating system and some key services Western users see as necessary - above all Google’s Play Store, the biggest repository of Android apps.

This particular obstacle could, under the right conditions, turn into a Huawei strength in Europe, a market that accounts for almost a third of the company’s smartphone unit sales, according to market analytics company IDC.

Last July, the European Commission fined Google €4.34bil for imposing illegal restrictions on smartphone manufacturers. In exchange for the right to preinstall the Play Store, they had to agree, among other things, not to sell devices running versions of Android not approved by Google: so-called Android forks. These operating systems are developed from the open source version of Android, which anyone can use, including Huawei if the US bans it from using American technology. Amazon.com Inc’s Fire OS is the best-known Android fork today, though there are others around.

The commission wrote that by obstructing the development of Android forks, Google and its parent company Alphabet Inc “closed off an important channel for competitors to introduce apps and services, in particular general search services, which could be pre-installed on Android forks.”

In its ruling, it made a strong case for forks as platforms for Google-independent innovation that, if they were allowed to spread widely, could have curbed Google’s market dominance in various areas.

Google has appealed the ruling, but it has also removed restrictions on handset makers to avoid further fines. This, however, hasn’t led to the proliferation of alternative platforms based on open-source Android: Big phone makers are locked into comfortable relationships with Google and see no need to experiment. Days after the European Union fined Google, Huawei, at the time the biggest phone manufacturer that provided an easy opportunity to install alternative Android-based operating systems on its devices, ended the programme without explanation.

If Google takes away the Android license, it’ll yank Huawei out of its comfort zone. The company isn’t likely to give up the European market without a fight, after spending billions of dollars developing a customer base. Consumers in some European countries now appear to be put off Huawei by the US attack, although, paradoxically, it appears to have fuelled the brand’s popularity in France.

France for Huawei

Percentage* of consumers who say they'll consider buying a Huawei device when they're next in the market for a smartphone

Source: YouGov BrandIndex

The company has said it developed its own operating system (likely an Android fork), and it’s been trying to lure developers to its app store.

If the US stops Huawei from preinstalling the Play Store, the Chinese manufacturer probably won’t spend much time educating consumers on how to install it on their own (the way people do now with phones bought in China).

That’s not what most users expect on a new, expensive device. Instead, Huawei will want to offer developers an easy way to sell apps not just in the Google store but also in one preinstalled on Huawei devices - to “multi-home” them.

Huawei hasn’t been eager to get into an open confrontation with Google, which was a valued partner.

But a breakup ordered by the US government changes things. Huawei, with plenty of resources of its own (and most likely with support from the Chinese government, determined to fight back against the US), could soon be investing heavily in the marketing and improvement of an Android fork. Given Huawei’s marketing potential, the effort isn’t necessarily doomed. And it could boost Asian and European developers deterred from competing in some areas - such as mapping, video services or even search - by Google’s enormous power.

Given the pushback in recent years against US tech companies’ relentless data collection and the widespread mistrust of Trump’s administration in Europe, there could well be demand for a Google-free phone from a major manufacturer known for superior hardware.

I know I’d be interested, and the French would probably lap it up, judging by their reaction to the US threats. The EU regulators, too, might be intrigued to see evidence that perhaps the Google antitrust ruling didn’t come too late.

This is something of a utopian scenario, I know. Huawei may never need to go on the warpath against Google: The US and China could strike a trade deal that would make the specter of restrictions go away.

Or, if Huawei is banned from buying US technology, it could find itself unable to produce marketable phones for a while. And, of course, it is a company from Communist China, making it difficult for European regulators, and even for private developers, to embrace it as a savior from the overly dominant US tech companies.

Monopolies in tech don’t last forever, however.

Sometimes they just need a push to start showing cracks. If the US moves against Huawei, it might be unknowingly giving such a push to Google in the smartphone market. — Bloomberg Viewpoint

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China will emerge victorious from US tech crackdown folly

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But it needs a lot of time. During this process, China cannot avoid paying a price and will have a difficult time. But Huawei still has a domestic market of more than a billion Chinese people and the market of the Third World countries. When the Trump administration cracks down on Huawei, the US also goes through hard times. The final victory will certainly be China's, but China must have adequate determination and endurance.

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Huawei ban: Risk or opportunity for M'sian tech companies? US-China trade war a boon

KUALA LUMPUR: It looked like the start of semiconductor manufacturers’ nightmare when US President Donald Trump fired another salvo in t...

Huawei ban: Risk or opportunity for M'sian tech companies? US-China trade war a boon

KUALA LUMPUR: It looked like the start of semiconductor manufacturers’ nightmare when US President Donald Trump fired another salvo in the escalating US-China trade war by blacklisting China’s mobile phone equipment giant, Huawei Technologies Co Ltd.

The act sent shock waves along the supply chain of the global semiconductor industry, sparking strong sell-offs in semiconductor companies’ shares worldwide. The same was seen in Malaysia, which caused the Bursa Malaysia Technology Index to sink 3.47% on Tuesday — the biggest loser among the indices — led by companies linked to the industry.

But it may not be a losing battle in the long run, at least not for Malaysian companies. The trade diversion that will arise from Huawei’s ban in the US, which effectively cuts off US chipmakers from the supply chain of Huawei — the world’s largest provider of networking gear and the second-largest smartphone vendor — may benefit domestic players here.

Pentamaster Group Bhd co-founder and chairman Chuah Choon Bin told The Edge Financial Daily that he expects the group’s telecommunications segment to see a 20% to 30% decline in sales as a result of Huawei’s blacklisting in the US. The contraction may take away some 18% in total sales it anticipates for the year.

However, Chuah said Pentamaster may also stand to benefit from the ban, as he expects China will become more aggressive in ramping up their product developments in the face of what happened to Huawei.

So, he sees a silver lining for the group in the form of trade diverted from US chip suppliers to those located elsewhere, possibly in Malaysia, where Pentamaster supplies chip tester equipment or automated tester equipment.

As such, Chuah does not expect Pentamaster to be greatly affected by Huawei’s ban in the US. In fact, the eventual tally may show Pentamaster gaining from the situation.

Pentamaster was among the technology counters on Bursa Malaysia that took a beating on Tuesday, following the news on Huawei’s ban.

Its shares sank as much as 29 sen on Tuesday to RM4.05, before easing to settle at RM4.10, down 24 sen or 5.53% at market close. It was one of the top losers in Bursa Malaysia’s Technology Index, which retreated to 30.9 points, dragging the FBM KLCI down 0.1% to close at 1,603.74.

Other semiconductor stocks that were badly hit include: Inari Amertron, which fell 10 sen or 6.67% to RM1.40; Mi Technovation Bhd, which was down 11 sen or 6.43% to RM1.60; Globetronics Technology Bhd, which retreated 10 sen or 5.92% to RM1.59; and Frontken Corp Bhd, which fell eight sen or 5.63% to RM1.34.

Nonetheless, the rebound on Wall Street among semiconductor stocks that were bogged down by fears over the trade war’s ripple effects, raised hope that its peers in Malaysia may follow suit, if the upward trend seen on Tuesday is sustainable.

The share price recovery was fuelled by the temporary 90-day reprieve that was granted to Huawei on Monday. The initial ban was to take effect on May 20. The Philadelphia Semiconductor Index gained 2.1% to end a three-day slump on Tuesday.

“The disruption to (the) supply chain will definitely be negative in the short term,” said an analyst who tracks the semiconductor industry, citing as example people who are considering switching mobile phones after the news that Alphabet Inc’s Google would be cutting off the supply of hardware and selected software services to Huawei once the 90 days is up.

“The trade war seems like breaking the supply chain into two ... this is going to be bad in the short term. But if China cannot get their supply from the US, they are likely to turn inwards ... [or to] countries like Malaysia,” the analyst added.

A Singapore-based fund manager commented that Malaysian tech companies presently do not have much to do with Huawei. But the ban is causing everyone in China to sit up and rethink their supply chain strategy. “In short, no one will believe in the US [anymore]. It is not a reliable and credible supplier. What it means is that it is positive for some of those tech companies in Malaysia that can offer what the Chinese need,” he said.

Some analysts, however, have a more cautious stance, saying it is too early to draw any conclusions on the matter given that it is hard to predict any retaliatory moves the two countries could make. The lingering concern remains that any slowdown in international trade volume will not augur well for the world economy, including Malaysia. Meanwhile, some have pointed out that the valuation of Malaysian semiconductor stocks are relatively higher compared with elsewhere.

By  Wong Ee Lin/The Edge Financial Daily

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Growing US pressure won't force China to submit 

The US Department of Homeland Security warned that drones pose a potential information risk because they contain components that can compromise users' data and share information on servers other than users.

Since nearly 80 percent of the Unmanned Aerial Vehicle (UAV) drones in North America are produced by China's Dajiang Innovation (DJI), a Shenzhen-based company, analysts generally believe that tarnishing DJI's reputation may be laying the groundwork for taking actionsagainst DJI.

DJI is the world's largest producer of civilian drones and is said to control more than 70 percent of the world's civilian drone market. The drones it produces are not only good in quality but also cheap. Many products are under $1,000, so they are popular and increasingly versatile.

The US military is also a DJI drone user. The use of DJI drones by the US military has not completely stopped following the controversy over its information security. This shows that while the US has real concerns about the information security risks of DJI UAV , there is no real evidence to support such concerns.

The US Department of Homeland Security raised the issue of the information security risks of UAV to increase leverage and pressure on China after the US decision to cut off supplies to Huawei. It seems Washington is in a hurry to press China to make concessions and reach a trade deal at an early date beneficial only to the US.

The vast majority of users in the US use DJI drones in non-classified areas. The airspace over sensitive US institutions is closed to drones and there is another set of security measures that have nothing to do with the use of DJI drones in the US market. The prevention of forest fires, assistance with construction layouts, and the development of express delivery services to remote areas are obviously not the direction that intelligence agencies are aiming for. It is hard to believe that DJI has an incentive to engage in "intelligence activities" at the risk of being shut out of international markets.

The US is abusing the concept of national security. It is the US that was caught a few years ago spying on the leaders of its allies. It is now saying that Beijing's intelligence threat is everywhere. A big part of it is putting on a show. It may be partly because the US does install a lot of "back doors" into its electronic exports, Washington thinks other countries will do the same.

China will not fall into the trap to make unconditional compromises as Washington increases its pressure. If the US cracks down on Chinese companies, American consumers and suppliers will also suffer losses.

The US is having a profound effect on the global economic order by abusing national security and trampling on commercial principles. Current US administration is destroying the reputation and national image that generations of Americans have built. Such arrogance and hegemony are by no means good signs for the US..

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Chinese people do not know whether we should call US approaches hegemonic politics or profiteering politics. But in short, they are crooked means. The threat of tariffs will not work. Neither will US threats against Chinese companies create a shock wave against China. The US is picking a wrong opponent at a wrong time. It will find no way of crafting a good result from a strategic mistake.

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