Microsoft Cuts Ties With Huawei

Microsoft will reportedly become the latest tech giant to ‘suspend’ its relationship with Huawei, according to the South China Morning Post.

One week after Washington first imposed strict limits on Huawei and its affiliates that will make it almost impossible for American firms buy Huawei products or sell American-made components to the company, a handful of chipmakers, telecoms companies and tech firms (Alphabet) have reportedly scaled back or severed their relationship with Huawe.

Though Microsoft said yesterday that it hadn’t made a decision, the SCMP reported Friday morning that Microsoft had decided to stop accepting new orders from Huawei for operating systems and other content-related services: Windows operating systems for laptops and other content-related services. The US software giant has already removed Huawei laptops from its online stores.

Like with Google’s Android ban, Windows will continue to work on existing Huawei PCs.

The Post understands that the Windows operating systems equipped on existing Huawei PCs will not be affected and will still be eligible for updates and security protections, according to one of the people. Meanwhile, Microsoft’s services team for the Chinese company has already moved out of its Shenzhen-based headquarters.

One of SCMP’s sources also insisted that the suspension may only be ‘temporary’, and that the relationship between Microsoft and Huawei would likely endure.

“This does not mean that Microsoft is not cooperating with Huawei any more. The suspension in business between the two companies could be just temporary,” said one of the people.

As more companies suspend their relationship with Huawei, the company will soon face its first test of global capital markets’ confidence in the Chinese telecoms giant, the company is said to be preparing to seek its first syndicated loan since tensions with Washington boiled over, per BBG. The latest fundraising attempt comes about four months after Huawei obtained a 14 billion yuan loan from five Chinese banks. Back in September, the company raised $1.5 billion in an offshore loan from a group of ten mostly international banks.

Whether the company borrows in dollars or HKD, it’s borrowing costs are likely to be significantly higher than in the not-too-distant past. Since Washington put Huawei on a trade blacklist, the company’s bonds have been hammered lower, sending its borrowing costs higher.

Beijing continues to back Huawei while denying accusations that Huawei is a tool of the state security apparatus. Responding to Mike Pompeo’s claim that Huawei’s CEO was lying about the company’s ties to Beijing, Chinese Foreign Ministry spokesman Lu Kang said Friday morning during his regular press briefing that US politicians continue to “fabricate lies to try to mislead the American people.”

“Recently, some U.S. politicians have continually fabricated rumors about Huawei but have never produced the clear evidence that countries have requested,” he said, according to Reuters.

Global Times editor Hu Xijin, one of the most closely watched mouthpieces for Beijing, pushed back at President Trump’s claim from Thursday that the trade spat would come to a swift conclusion, saying “this kind of confidence believing that the US can quickly pres China to submit is the biggest obstacle to reaching a deal.”

President Trump on Thursday predicted a swift end to China-US trade war. This kind of confidence believing that the US can quickly press China to submit is the biggest obstacle to reaching a deal. The trade war may last for a long time. I think people better not hold illusion.

— Hu Xijin 胡锡进 (@HuXijin_GT) May 24, 2019

Another Chinese envoy reiterated on Friday that there are no plans for a Trump-Xi meeting, sending US stock futures reeling. If relations between Washington and Beijing remain frosty, Japanese officials might need to borrow a few strategies from the classic American film ‘The Parent Trap’ to ‘facilitate a dialogue’ and save the global economy.