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Founder says US underestimates Huawei as US eases restrictions

US govt eases restrictions on telecom firm, but Ren Zhengfei says move has little meaning as Huawei is prepared

SHANGHAI/NEW YORK: The US has temporarily eased trade restrictions on Huawei to minimise disruption for its customers, a move the founder of the world's largest telecom equipment-maker said meant little because it was prepared for US action.

The US Commerce Department blocked Huawei from buying US goods last week, saying the company was involved in activities contrary to national security.

On Monday, the Commerce Department granted Huawei a licence to buy US goods until Aug 19 to maintain existing telecom networks and provide software updates to Huawei smartphones, a move intended to give telecom operators that rely on Huawei time to make other arrangements.

Huawei founder Ren Zhengfei told Chinese state media yesterday that the reprieve bore little meaning for the company as it had already been making preparations for such a scenario.

"The US government's actions at the moment underestimate our capabilities," Mr Ren said in an interview with CCTV, the Chinese state broadcaster.

The temporary licence suggests changes to Huawei's supply chain may have immediate, far-reaching and unintended consequences for its customers.

The Commerce Department said it will evaluate whether to extend the licence period beyond 90 days.

Huawei is on the receiving end of a US government accusation that it engaged in bank fraud to obtain embargoed US goods and services in Iran and move money through the international banking system. Huawei has pleaded not guilty.

The trade blacklist has added to its woes. Then, Google suspended some business with Huawei, raising worries about its smartphones that run on Google's Android system.

Monday's temporary licence is likely to allow companies such as Google to continue providing service and support, including software updates or patches, to Huawei smartphones that were available to the public on or before May 16.

Mr Ren put up a brave front yesterday, reiterating claims that the restrictions will not hurt Huawei's prospects and that no other company will be able to catch up with Huawei in 5G technology in the next two to three years.

China was nevertheless still "far behind" the US in technology, he said.

Chip experts have called out Huawei on its claims that it could ensure a steady supply chain without US help, saying the technology it buys from American companies would be "hard to replace".

Nearly 16 per cent of Huawei's spending on components last year went to US companies including Qualcomm, Intel and Micron Technology, analysts said.

Mr Ren said Huawei was at odds with the US government, not US companies, and in a comment that trended on Chinese social media, he praised Apple's iPhones, saying he gifted the American company's devices to family members.

US companies could lose up to US$56.3 billion (S$77.6 billion) in export sales over five years from stringent export controls on technologies involving Huawei or otherwise, the non-profit Information Technology and Innovation Foundation said in a report. - REUTERS

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