MORRISVILLE – Lenovo is denying reports in China that it has cut off tech supplies to embattled communications giant Huawei Technologies.
“After an investigation, we confirm Lenovo is supplying to Huawei as usual,” said Lenovo in a statement published via Chinese social media.
“Huawei is a significant client of Lenovo PC and services. We will continue to sell products and services to Huawei on the basis of strict compliance with relevant laws and regulations of the countries and regions where Lenovo does business.”
The Trump Administration has targeted Huawei in particular as trade war tensions rise between China and the U.S.
Lenovo’s acknowledgement of following “relevant laws and regulations” tacks with previous responses with the tech conglomerate, which operates dual headquarters in Morrisville and Beijing, when facing sensitive trade issues.
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The Lenovo news came as Google said Monday that its basic services on Huawei smartphones still will function following U.S. sales curbs, but Huawei faces the possible loss of other features and support.
The company has said until now U.S. accusations it is a security threat have had little impact on sales outside the United States.
Huawei, which uses Google’s Android operating system in its smartphones, said it would continue to provide security updates and service. It gave no indication which map, photo or other services they might lose.
The Trump administration’s order targets China’s first global tech brand and ratchets up disputes with Beijing over technology, trade and cyber-security.
Google, a unit of Alphabet Inc., said it is complying with and “reviewing the implications” of the requirement for export licenses for technology sales to Huawei, which took effect Thursday.
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“We assure you while we are complying with all US gov’t requirements, services like Google Play & security from Google Play Protect will keep functioning on your existing Huawei device,” said Google on Twitter.
Google allows smartphone manufacturers to use Android and its basic services for free. But transfer of hardware, software or services to Huawei or technical interaction would be restricted by the U.S. order.
That would strip Huawei phones of Google maps and other services that require direct support. That might hurt Huawei where consumers can pick other brands that carry the full suite of Google features.
The U.S. government says Chinese suppliers including Huawei and its smaller rival, ZTE Corp., pose an espionage threat because they are beholden to China’s ruling Communist Party. But American officials have presented no evidence of any Huawei equipment serving as intentional conduits for espionage by Beijing.
Huawei, headquartered in the southern city of Shenzhen near Hong Kong, reported earlier its global sales rose 19.5% last year over 2017 to 721.2 billion ($105.2 billion). Profit rose 25.1% to 59.3 billion yuan ($8.6 billion).
Huawei smartphone shipments rose 50 percent over a year earlier in the first three months of 2019 to 59.1 million, while the global industry’s total fell 6.6 percent, according to IDC. Shipments by industry leader Samsung and No. 3 Apple declined.
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Huawei defended itself Monday as “one of Android’s key global partners.” The company said it helped to develop a system that “benefited both users and the industry.”
“We will continue to build a safe and sustainable software ecosystem, in order to provide the best experience for all users globally,” said a company statement.
A foreign ministry spokesman said China will “monitor the development of the situation” but gave no indication how Beijing might respond.
The government said it would take steps to protect the rights of Chinese companies abroad following last week’s announcement but has given no indication what it might do.
“China supports Chinese companies to take up legal weapons to defend their legitimate rights,” said the spokesman, Lu Kang.
The U.S. order took effect Thursday and requires government approval for all purchases of American microchips, software and other components globally by Huawei and 68 affiliated businesses. Huawei says that amounted to $11 billion in goods last year.
Tech transfer trend continues
Meanwhile, the number of foreign companies that feel compelled to hand over technology in exchange for Chinese market access — an issue that helped sparked Trump’s tariff fight with Beijing — has doubled since two years ago despite official promises to end such pressure, a business group reported Monday.
The European Chamber of Commerce in China’s report highlighted enduring complaints about “forced technology transfer” that China’s trading partners say violate its market-opening commitments despite denials and promises of change.
European leaders have criticized Trump’s tactics in confronting Beijing over its technology ambitions but echo U.S. criticisms.
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One in five companies that responded to a survey in January, before the latest round of U.S. and Chinese tariff hikes, said they felt compelled to hand over technology, up from 10% in a 2017 survey, the European chamber said.
“It is not something that is back in history. It is still happening now,” a chamber vice president, Charlotte Roule, told reporters ahead of the report’s release. She said ending that “should be a priority.”
The share of companies that said they felt compelled to transfer technology was higher in some fields — 30% in petroleum and chemicals, 28% in medical devices, 27% for pharmaceuticals and 21% in the auto industry. One-quarter of those companies said transfers were happening at the time of the survey.
The report gave no details of why companies felt compelled to hand over technology. But the heavily regulated economy gives Chinese regulators leverage over companies, and business groups say they sometimes give orders in secret.
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Trump started raising tariffs on Chinese imports last July over complaints Beijing steals or pressures foreign companies to hand over technology. Europe, Japan and other trading partners echo U.S. complaints that such practices violate Chinese commitments to open its markets and treat foreign companies equally in exchange for access to their markets.
“China’s lagging reform agenda not only holds back economic development but it has also driven global tension,” said Roule.
Chinese officials deny foreign companies are required to hand over technology. But companies in auto manufacturing, electronics and other industries that want to operate in China are required to be minority partners in ventures with state-owned partners, which forces them to share technology and expertise.
A law endorsed in March by China’s ceremonial legislature tries to reassure foreign investors by prohibiting use of “administrative measures” to compel technology transfer. Business groups welcomed that but said Chinese officials still have extensive leverage in the heavily regulated economy.
Tech transfer was one of a series of complaints the European chamber said prompts pessimism among companies about whether the ruling Communist Party will follow through on promises to open its markets.
One-third of companies surveyed said they don’t expect ever to see a “meaningful opening” of Chinese markets.
