After Telecom, Huawei could see its Solar Business come under fire from Trade War

Huawei has become the poster boy or rather the whipping boy of the US-China trade war with the USA going hammer and tongs against the Chinese giant and the way it operates. USA has almost banned Huawei from supplying its telecom equipment in the USA and is also trying to persuade other countries to stop or ban Huawei in supplying equipment for the 5G technology.

It is putting huge pressure on Huawei by applying strong financial and physical sanctions that bar US entities from working with Huawei which means that software companies such as Google can’t supply Android software for Huawei phones and semiconductor companies who supply critical chips for Huawei’s hardware equipment. Huawei is close to the Chinese government and in the last few years has become the dominant supplier of telecom equipment to a large number of countries. The company along with ZTE supplies telecom equipment at a much lower cost than western suppliers such as Nokia and Ericsson. This has led to rapid market share gains in the global telecom market. With revenues of billions of dollars, Huawei and ZTE have also become strong as technology innovators with large R&D budgets.

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The USA thinks that the Chinese company would supply critical communication information to the Chinese government and in case of hostilities might disable the communication infrastructure. This could happen not only to USA but also to its allies. After telecom, USA Senators also want Huawei to stop supplying its inverters for USA solar projects. In the last five years, Huawei has become one of the largest suppliers of inverters to solar projects using its expertise in electrical equipment and its low cost base to sell inverters to solar developers around the world. The USA fears just like in telecom, Huawei could disable crucial power infrastructure in the case of war with China. This measure if followed through could put further pressure on Huawei which is already seeing its revenues and profits hurt in its mainstay telecom equipment and mobile divisions.

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