Recent Effect Of ‘Entity List’ Issue: Huawei Will Lay-off Hundreds Of Employees

Huawei announced extensive lay-offs in its US operations, with hundreds of Americans losing their jobs.

Lay-offs are expected to happen in Huawei’s US-based research and development arm named Futurewei Technologies, Inc. Currently, the R&D company employs 850 workers. The company’s labs have divisions in Texas, California, and Washington.

Employees who were born in China can choose to go back to their homeland and keep their jobs.

According to a report by The Wall Street Journal, several employees have received notification about their dismissal. More employee removals should be expected in the next few months.

A month ago, Huawei implemented countermeasures to ensure Futurewei will not be implicated in its parent company’s issues. Futurewei’s IT system was moved to a separate one, and aside from systems, Futurewei can no longer use Huawei’s logo and name in any type of communications. The company goes so far as to banning its Huawei employees from going into Futurewei offices.

However, this strategy did not work. Despite the distance Futurewei has placed between it and its parent company, it was not spared from the planned lay-offs.

The decision to have massive lay-offs came from Huawei’s controversial involvement in the on-going US-Chinese trade conflicts. Huawei was placed in the Entity List last May, effectively restricting US suppliers to provide service to the Chinese firm, unless the government has issued a license. Any sharing of data on US technology is also included in the restriction.

Huawei was placed in the list, along with 68 affiliates, due to speculations that the company is conducting espionage activities for China.

The Futurewei staff has also been restricted to communicate with Huawei’s Chinese counterparts. According to anonymous sources from Engadget, Futurewei staff cannot share information with its colleagues in China offices because the data or information may be considered as US technology.

The dismissals are pushing through despite President Donald Trump’s promise to ease the restrictions set last May. Huawei executive and chairman Liang Hua shared that there’s no change done since the report.

“So far we haven’t seen any tangible change,” Liang said in a news conference held in Shenzhen, China.

Last Wednesday, US Commerce Secretary of Wilbur Ross clarified what “easing restrictions” meant. In a speech reported by the New York Times, Ross said that they would be more lenient and issue more licenses as long as is deemed no threat to US national security. However, Ross stressed that Huawei will still be on the Entity List.

Ross also did not provide a comprehensive definition of what constitutes a threat to the US National Security.

“We’re not saying that just because things have relaxed a little, we’re fine with being on the blacklist,” Liang said as reported by the Associated Press. “Actually, we believe our listing on the blacklist should be lifted completely.”

The effect of the Entity list is subjecting Huawei to a tremendous loss in revenue. According to Huawei CEO Ren Zhengfei, the estimated loss is around $30 billion in 2019 and 2020. Before the Entity List ban, Ren said he expected a sales increase of at least 30% this year.

Other Effects of the Entity List

Reducing the workforce is just the recent effect of Huawei’s inclusion in the Entity List.

Starting May, US companies such as Google and Facebook have reportedly withheld their products and services for the China-based company.

Google has withdrawn its Android operating system (OS) for future Huawei products. Google Play Store and other services like Google Play Protect security will no longer be available in future phones or laptops.

However, Google has assured customers who have existing Huawei phones that their OS and services will still be intact. Security updates will still be available to any current Huawei phone users.

In March, Huawei had shared that it was building its OS when Google limited its services for Huawei to what’s available in its open source. The China-based OS is called HongMeng and has excited Huawei fans when CEO Ren announced that it’s 60% faster than the current Android OS.

However, Liang has recently informed the public that the HongMeng OS is not meant to be a replacement of the Android OS. “We haven’t decided yet if HongMeng can be developed as a smartphone operating system in the future,” Liang said in the Szenzhen news conference.

Another service blocked is Facebook’s suspension of pre-installed apps on Huawei smartphones. Although, the apps will still be available for download for any Huawei users. Facebook, WhatsApp, and Instagram will not be loaded in the phones right out of the box.

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