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Huawei exec: ‘Google is still trying to supply to Huawei’

SHENZHEN, CHINA — Google (GOOG, GOOGL) has applied for an export license with the U.S. Department of Commerce to source its Android Operating System to Huawei, the head of the Chinese company’s consumer business told Yahoo Finance — raising hopes for the embattled telecommunications giant’s fastest growing segment.

In an interview at Huawei’s headquarters in Shenzhen, Kevin Ho, the president of the handsets business, said his company is moving forward with the expectation that Google’s waiver will be granted, enabling the use of Android’s OS on new Huawei phones scheduled for launch later this year.

“Google is still trying to supply to Huawei,” Ho said. “We have had several conversations about how to collaborate.”

Google did not respond to a request for comment. Intel, another major U.S. supplier of Huawei, said it’s working hard in Washington in order to continue to sell to Huawei.

Yahoo Finance interviews Huawei's Kevin Ho.
Yahoo Finance interviews Huawei's Kevin Ho.

Huawei’s consumer business has been hit hard since the Commerce Department’s Bureau of Industry and Security added the company and its 68 non-U.S. affiliates to the Entity List in May, effectively banning American suppliers from doing business with them. While the agency granted a 90-day reprieve, a few days later, allowing companies to continue supporting existing networks and equipment, including Android software and updates, the long-term future has been largely unclear.

In the weeks following the Commerce Department’s blacklist designation, smartphone sales plummeted more than 40% in some markets, according to company executives. Founder and CEO Ren Zhengfei has warned of a $30 billion revenue hit for the year, stemming from the clampdown, telling Yahoo Finance the company was not “fully prepared for being added to the Entity List.”

But the initial slump quickly recovered, according Huawei, after the company launched a series of marketing campaigns and a 2-year Assurance Warranty in countries like Italy, Germany, and Singapore. The warranty offers customers a full refund if Google apps stop working on the device within two years of the purchase, executives said.

‘Right now we only have Plan A’

While Huawei has since shifted its supply chains to source from non-American chipmakers, it has no alternative operating system to turn to, if the U.S. government denies access to Google’s Android. Ren said the company is prioritizing development of its Hongmeng operating system, which is designed specifically for use in the Internet of Things like smart TVS, artificial intelligence, and autonomous driving.

“We will only look into developing our own smartphone OS when Android is no longer an option, but as of now, we don't plan on it,” Ren said.

The uncertainty around a government waiver for Google has put upcoming launches of new Huawei devices in question.

It is scheduled to launch its first 5G smartphone, the Mate 20 X 5G, later this month; Mate 30 in September; and its foldable Mate X later this year. But Ho admitted any launch is likely to be delayed, if the devices are unable to run on Android.

“We are discussing this kind of issue, but right now we have only Plan A, to prepare the launch of our new products with Android,” he said.

Still, Ho said the company is sticking to its forecast of 20% growth in global smartphone sales, year on year. He added that numbers have dramatically bounced back since June, when the company saw a 25% decline in sales, nearly halving the decline from the previous month.

Ren now estimates 270 million phones will be shipped this year, higher than the goal the company initially put out, prior to being added to the Entity List.

“The more advanced a product is, the fewer risks we face,” Ren said.

Krystal Hu contributed to the story.

More from Yahoo Finance’s exclusive interview:

Huawei CEO Ren Zhengfei: ‘Shutting Huawei out is the start of the U.S. falling behind’

Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter at @AkikoFujita

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