Qualcomm Incorporated (NASDAQ:QCOM)
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1 Month : From May 2019 to Jun 2019
By Dan Strumpf and Yoko Kubota
Google is halting some services for smartphones made by Huawei Technologies Co., according to people familiar with the matter, in a sign that the U.S. decision to deny the Chinese tech giant access to U.S. technology will bite into its booming consumer-device business.
Huawei, which recently surpassed Apple Inc. as the world's No. 2 supplier of smartphones--it now trails only Samsung Electronics Co.--relies on Google's Android operating system to run its devices. Though existing phones are expected to keep functioning largely as usual, users could lose some functions, according to a person familiar with the matter.
Separately, San Diego-based Qualcomm Inc. has suspended shipments to Huawei of its chips, and its employees have been told not to communicate with the Huawei side, according to a separate person familiar with the matter. Qualcomm chipsets are used in certain Huawei smartphone models. Huawei also designs a large number of its own chips for higher-end phones.
Last week the U.S. Commerce Department announced it was adding Huawei to its "Entity List" on national-security grounds, requiring companies that export U.S. technology to the Chinese company to apply for a license. The department has indicated applications are likely to be denied, which would cut off Huawei from a range of crucial American suppliers.
Huawei, the world's biggest maker of telecommunications gear, draws upon suppliers from around the world, but it relies on American companies to supply certain components that go into its smartphones, cellular base stations and other products.
Huawei's founder and CEO, Ren Zhengfei, told reporters Saturday that the impact on smartphone production would be limited even if Huawei cannot import chips, according to a spokeswoman who confirmed his remarks.
A Huawei spokesman said the company will continue providing security updates and after-sales services to existing Huawei smartphone and tablets, "covering those that have been sold and that are still in stock globally."
"As one of Android's key global partners, we have worked closely with their open-source platform to develop an ecosystem that has benefitted both users and the industry," the spokesman said.
A person familiar with the matter said Huawei will only be able to use the public version of Android and will not have access to proprietary apps and services from Google.
A Google spokesman said the company is "complying with the order and reviewing the implications." The spokesman added that many Android functions will continue running as normal, including access to the Google Play app-store service and security protections from Google Play Protect. Reuters first reported the halt by Google.
Google's standard suite of apps, like Google Maps and Gmail, will continue to function normally, according to a person familiar with the matter. However, Huawei phones may lose other Google services as part of U.S. government action, this person said. Proprietary apps and services such as some artificial-intelligence capabilities that connect to Google infrastructure may cease to function, according to this person.
Huawei's global smartphone shipments rose 50% in the first quarter, bucking an industrywide decline of 6.7%, according to research firm International Data Corp. The consumer-business group last year became the biggest source of revenue for the Shenzhen-based technology giant, outpacing revenue from its carrier customers for the first time. Last year, consumer sales including smartphones, laptops and other gadgets accounted for 48% of Huawei's $107 billion in revenue.
Qualcomm didn't immediately respond to a request for comment.
Huawei has been stockpiling inventory and has developed its own operating system to protect against a supply disruption. However, it isn't clear when or if Huawei can easily switch operating systems on existing smartphones.
Write to Dan Strumpf at email@example.com and Yoko Kubota at firstname.lastname@example.org
(END) Dow Jones Newswires
May 20, 2019 05:33 ET (09:33 GMT)
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