Huawei releases a faster phone to compete with Apple. Here’s why the US is worried.

Huawei’s latest phone, the Mate 60 Pro, is creating buzz among tech lovers in China. But in the US, the new device is raising concerns, along with an investigation by the US Department of Commerce.

One issue for US officials is the technology inside the Huawei phone, which reportedly includes an advanced 7-nanometer processor made by SMIC, China’s leading chip maker, according to Capital Economics. With that chip, the phone has enough power and speed to compete with Apple’s iPhone, and it has sold briskly in China.

That raises questions about the effectiveness of US export controls, which have been aimed at limiting Huawei’s ability to acquire advanced components such as advanced processors. Until now, these limitations had effectively crippled Huawei’s smartphone business.

“Prior to the US sanctions, the company was well on its way to becoming a global powerhouse,” Capital Economics noted in a report. “In 2018, it sold more phones in Europe than Apple.”

The Department of Commerce told CBS MoneyWatch that it is investigating the new phone.

“We are working to obtain more information about the nature and composition of the alleged 7nm chip,” a Commerce official said. “Let’s be clear: Export controls are just one tool in the US government’s toolbox to address the national security threats presented by China,” or the People’s Republic of China.

Huawei’s new phone arrives as the United States and China compete on several fronts and amid rising tensions over geopolitical flashpoints such as the status of Taiwan and the war in Ukraine.

US Commerce Secretary Gina Raimondo met with Chinese officials in Beijing in August in a rare diplomatic overture to discuss strategic and commercial interests. Appearing on “Face the Nation” last week, she emphasized the Biden administration’s goal of improving trade relations, but pointedly noted that the patience of American companies is “wearing thin” when it comes to doing business in China.

Here’s what you need to know about Huawei, the Mate 60 Pro and the impact on Apple.

What is Huawei?

China’s Huawei, one of the world’s largest telecommunications companies, was founded in 1987 and now has more than 200,000 employees and operates in 170 countries.

Despite its size, the company is largely unknown to American consumers because it is difficult to buy its products in the US lawmakers and the FBI claims that Huawei is a threat to national securitywhile AT&T and Verizon both stopped distributing Huawei devices in 2018.

Why did the US put export restrictions on Huawei?

The company’s rapid growth was accompanied by American concerns about its relations with the Chinese government, as well as fear of espionage. In 2019, the US declared Huawei a security risk and imposed export control on US technology sales to the company.

The Commerce Department said on Friday that in 2019, these restrictions “toppled Huawei and forced it to reinvent itself — at a significant cost” to China.

Commerce Minister Gina Raimondo on “Face the Nation” | entire interview


What is Mate Pro 60?

The Mate Pro 60 is the latest phone in Huawei’s Mate series of smartphones. The new phone shows evidence of a 7-nm chip made by SMIC, “which represents a made-in-China design and manufacturing milestone.” according to to the research firm TechInsights.

Huawei began taking orders for the new phone on Friday and will ship the devices by October 9, according to to Reuters. Speed ​​tests show that the Mate Pro 60 is capable of downloads faster than the best 5G phones currently on the market, the publication added.

One YouTube reviewer noticed that the phone also has satellite support, a 6.82-inch OLED display, a 5,000 mAh battery and starts at $900. “It’s a beast,” he added.

Huawei Mate60 Pro phone popular in China
A customer checks out Huawei’s new Mate 60 Pro phone at the telco’s flagship store in Shanghai, China, on September 5, 2023.

Costfoto/NurPhoto via Getty Images

How does this affect Apple?

The latest Huawei phone comes at a sensitive time for Apple, which is expected to debut its latest phone, the iPhone 15, on Tuesday.

At the same time, China is one of Apple’s most important markets, accounting for around 20% of its revenue. As well as renewed competition from Huawei, Apple is also facing new restrictions from the Chinese government, with reports of government employees being banned from using iPhones.

News of the ban resulted in Apple shares losing approx 200 billion dollars in market capitalization this week.

Still, some experts believe the concern about the impact of a government ban is unwarranted.

“On recent China news over the past few days, we believe in a worst case scenario that any Chinese government agency’s iPhone ban is highly exaggerated to quantify its less than ~500,000 iPhones out of the roughly 45 million we expect to be sold in China over the next 12 months,” Wedbush Securities analyst Dan Ives told investors in a client note.

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