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Karen Chiu

This article originally appeared on ABACUS
Huawei is facing a criminal investigation over possible violations of US sanctions against Iran, according to The Wall Street Journal.
Details of what exactly Huawei is accused of are still unclear, and the company told the South China Morning Post in a statement that it complies with all applicable laws and regulations everywhere it operates. But the stakes are high, because we’ve already seen one Chinese smartphone giant get punished by US authorities.

Just last week, the US government banned American companies from selling their hardware and software to ZTE for seven years. That’s after the Chinese smartphone maker was accused of failing to punish employees responsible for illegal sales to Iran.
The ban means ZTE won’t be able to use Snapdragon CPUs from Qualcomm, and could mean it can’t use Google’s version of Android -- which would mean no Gmail, no Google Maps, and no Google Play app store.
If a similar ban were to hit Huawei, it could potentially have a huge impact because it has leaned heavily on software from US companies.
Huawei’s phones outside of China also run Google’s version of Android. (Huawei does have its own app store, which also hosts some Google apps -- but it’s unclear how those would be affected.)
The company has also partnered with Microsoft to put customized versions of Linkedin and Microsoft Translator apps on Huawei’s Mate 10 devices -- and provides Microsoft apps on its cloud service.
Unlike ZTE, Huawei hasn’t found much success trying to sell smartphones in the US. While ZTE is currently the fourth biggest smartphone brand in the country, Huawei has so far failed to secure a carrier partner -- in a country where 90% of all handset sales are through carriers.
But while Huawei doesn’t have many consumers in the US, it does have customers: Mobile and internet providers in rural areas. These smaller carriers say they rely on Huawei’s cheap services to bring high-speed connection to remote places.
No matter what the result of the US probe on Huawei, these carriers -- which often receive government funding -- may need to start looking for new suppliers.
Earlier this year, two US senators proposed a law that would block the government from buying telecommunications equipment from Huawei and ZTE, citing allegations that China might be spying on Americans through these companies’ products.
Both Huawei and ZTE have denied those claims.

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