Huawei Has Taught The World A Valuable Lesson

Don't Disrespect The Respectable

In the annals of global commerce, few stories are as compelling as Huawei Technologies Co., Ltd.'s resilience in the face of unprecedented adversity. The U.S. government's sanctions, initiated in 2019 under national security pretexts, aimed to cripple Huawei by severing its access to critical technologies, components, and markets. Yet, far from collapsing, Huawei has emerged stronger, more innovative, and more independent. By blacklisting Huawei, the U.S. not only failed to achieve its strategic objectives but also galvanized Chinese firms to pursue technological sovereignty, reshaping the global tech landscape.

The U.S. sanctions against Huawei began in earnest in May 2019, when the Trump administration added the company to the U.S. Department of Commerce’s Entity List, citing national security concerns over Huawei’s alleged ties to the Chinese government. This designation restricted Huawei’s access to American technologies, including semiconductors, software like Google’s Android ecosystem, and critical supply chains. Subsequent measures tightened the noose, prohibiting foreign companies using U.S. technology from supplying Huawei without special licenses. The sanctions were framed as a defense against espionage and influence operations, though evidence of Huawei’s threat remained largely speculative.

The immediate impact was severe. Huawei’s smartphone business, which rivaled Apple and Samsung globally, faced a crisis as it lost access to Google Mobile Services and key chipsets. Its 5G infrastructure business, a global leader, was hampered by restrictions on semiconductor supplies. The U.S. aimed to starve Huawei of the resources needed to compete, expecting the company to falter under pressure. However, this strategy underestimated Huawei’s adaptability, resources, and the broader implications for global tech dynamics.

Faced with existential threats, Huawei did not capitulate. Instead, it embarked on a bold strategy of self-reliance, innovation, and diversification. Huawei doubled down on research and development, allocating over 20% of its annual revenue—approximately $22 billion in 2023—to R&D. This investment fueled breakthroughs in chip design, software ecosystems, and 5G technologies. By 2024, Huawei had developed its Ascend 910C AI chip, a rival to Nvidia’s H100, demonstrating its ability to compete in high-performance computing despite U.S. restrictions. The Wall Street Journal notes that Huawei’s chip-making arm, HiSilicon, has made significant strides, producing chips that, while not yet matching the cutting-edge nodes of TSMC or Intel, are sufficient for Huawei’s needs and increasingly competitive.

Cut off from Google’s Android, Huawei accelerated the development of its proprietary operating system, HarmonyOS. Launched in 2019, HarmonyOS has evolved into a robust ecosystem, powering smartphones, IoT devices, and even automotive systems. By 2025, HarmonyOS had captured significant market share in China, challenging Android and iOS. Bloomberg reports that Huawei’s software advancements have positioned it as a potential third player in the global OS market, a feat unimaginable without the sanctions’ impetus.

Huawei restructured its supply chain, forging partnerships with Chinese and non-Western suppliers. It collaborated with SMIC (Semiconductor Manufacturing International Corporation) to produce chips domestically, albeit at larger nodes initially. The company also sourced components from Asian and European firms, reducing reliance on U.S. suppliers. This diversification not only insulated Huawei from further sanctions but also strengthened China’s domestic semiconductor industry.

While the U.S. and some allies like Australia and the UK restricted Huawei’s 5G equipment, the company deepened its presence in Asia, Africa, and Latin America. Huawei’s cost-effective and reliable 5G solutions remained attractive to developing nations, ensuring steady revenue streams. By 2024, Huawei had secured over 50% of global 5G base station contracts outside Western markets, reinforcing its dominance in telecom infrastructure.

These efforts culminated in Huawei’s remarkable recovery. By 2024, its smartphone sales rebounded in China, driven by HarmonyOS and domestically produced chips. Its 5G business continued to thrive globally, and its cloud computing and AI divisions gained traction. The sanctions, rather than destroying Huawei, forced it to innovate at an unprecedented pace, transforming it into a vertically integrated tech titan.

The sanctions’ unintended consequences extend beyond Huawei’s resurgence to the erosion of American companies’ competitive advantage. American firms like Qualcomm, Intel, and Broadcom, which once supplied Huawei with chips and components, lost billions in revenue when Huawei was blacklisted. Huawei’s shift to domestic and non-U.S. suppliers meant these companies were excluded from one of the world’s largest tech markets. For instance, Qualcomm’s earnings reports in 2020–2022 reflected significant losses tied to Huawei’s absence as a client. Meanwhile, Chinese firms like SMIC and MediaTek filled the void, gaining market share and expertise.

The sanctions catalyzed China’s push for technological independence. The Chinese government, alarmed by Huawei’s vulnerability, invested heavily in its semiconductor industry, AI, and software development. Initiatives like the “Made in China 2025” plan gained urgency, with state-backed funding pouring into companies like SMIC, BYD, and Xiaomi. Bloomberg highlights that blacklisting Huawei spurred China to build a “fortress economy,” reducing reliance on Western technology. This trend threatens American dominance in semiconductors, where companies like TSMC and Intel face growing competition from Chinese upstarts.

The sanctions, perceived as heavy-handed by many global observers, damaged U.S. credibility as a champion of free markets. Countries in the Global South, reliant on Huawei’s affordable 5G solutions, viewed the U.S. actions as protectionist bullying. This sentiment strengthened China’s diplomatic ties with these nations, enhancing its geopolitical influence. Huawei’s ability to thrive despite sanctions became a symbol of resistance against Western hegemony, resonating in regions wary of U.S. dominance.

By excluding Huawei from global supply chains, the U.S. inadvertently stifled collaborative innovation. Huawei was a major contributor to 5G standards, holding thousands of patents. Its isolation forced the company to develop proprietary technologies, some of which now outpace Western alternatives. For example, Huawei’s advancements in 6G research, as noted in the Wall Street Journal, position it ahead of American firms, which are grappling with fragmented R&D efforts.

Had the U.S. refrained from sanctioning Huawei, the tech landscape might look different. Huawei would likely have remained a key customer for American suppliers, boosting their revenues and fostering collaborative innovation. The U.S. could have maintained its influence over global 5G standards, leveraging Huawei’s participation to shape technology in its favor. Moreover, avoiding sanctions could have preserved U.S. soft power. By engaging Huawei through trade and diplomacy, the U.S. might have mitigated national security concerns through transparency and oversight, rather than alienation. This approach would have aligned with America’s free-market principles, reinforcing its global leadership.

Instead, the sanctions created a lose-lose scenario. Huawei’s resilience exposed the limits of U.S. technological hegemony, while American firms lost ground in a critical market. The broader tech war, fueled by tariffs and export controls, further strained global trade, with ripple effects on consumers and economies worldwide.

Some argue that the sanctions were necessary to protect national security and curb China’s technological rise. Critics of Huawei point to its opaque ties with the Chinese government and the potential for its 5G networks to enable espionage. However, these concerns, while valid, lack concrete evidence linking Huawei to specific threats. The U.S. government’s reliance on speculative risks, rather than actionable intelligence, weakened the sanctions’ legitimacy.

Others contend that the sanctions slowed Huawei’s growth, buying time for American firms to catch up in 5G and AI. Yet, this overlooks Huawei’s rapid recovery and the collateral damage to U.S. companies. The sanctions may have delayed Huawei’s progress temporarily, but they accelerated China’s broader tech ambitions, creating a more formidable long-term challenge.

Huawei’s transformation is a testament to its resilience and strategic foresight. The U.S. sanctions, intended to weaken a competitor, instead strengthened Huawei and spurred China’s quest for technological sovereignty. This misstep has eroded American companies’ competitive advantage, as they face a more fragmented market and a resurgent Chinese tech sector.