US restrictions on Huawei to obstruct global 5G network rollout, industry earnings: report

NEW YORK - The US restrictions on sale and transfer of American technologies to Chinese telecom giant Huawei would hold back the launch of 5G networks and earnings of the tech sectors across the world, Swiss leading investment bank UBS said in a latest research report.

"Lengthy restrictions on Huawei could slow the global rollout of 5G networks," said the report released on Wednesday.

"These developments increase the likelihood telecom providers take a wait-and-see approach on the dispute before making 5G purchase for their next generation networks," it added.

Assuming the current restrictions stay in place, UBS estimated that industry earnings would decline by low-single-digits percentage for the US tech players in general.

While for the Asian tech sector, such losses would expand by mid-single-digits percentage. Yet the bank saw a neutral impact for Europe's tech industry.

Washington last week declared a national emergency over what it claimed are technological threats, and announced restrictions on sale and transfer of American technologies to Huawei.

"US companies are now required to obtain licenses to transfer technology to Huawei, effectively restricting them from selling new components, chips or software to the Chinese company and its 70 affiliates without prior US government approval," UBS explained to its clients.

Yet the US Department of Commerce on Monday issued a 90-day temporary license, effective from May 20 to Aug 19, which allows "specific limited engagement in transactions involving the export, reexport, and transfer of items" to Huawei.

"However, rather than a reprieve for the Chinese firm itself, the slight easing of rules is squarely aimed at Huawei's past customers, such as rural broadband providers or owners of its Android phones," UBS said.

The financial institution further pointed out that the impact on the global supply chain would be contingent on "the length and severity of restrictions imposed on Huawei."

In response to the US restrictions on Huawei, Ren Zhengfei, the company's founder and president, said on Tuesday that Huawei never wants to "walk alone" in the global markets, but has made good preparations for any extreme circumstances, adding that it would not reject the US supply chain.