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PARIS – S & P Global Ratings said Sunday that potential restrictions on equipment manufactured by the Chinese company Huawei Investment & Holding Co. Ltd.
(unlisted) could have a huge impact on the industry around the world, but it did not have to wait.
no stock rating at the moment on the companies she is rating in the sector.
As part of the broader ongoing trade talks between the United States and China, we expect that
developments. The ultimate scope and duration, and hence the impact of any ban, are not yet known.
certain. The ban on ZTE Corp. in China last year lasted four weeks but it may be that
indicative result for Huawei.
"Currently, we consider that the short-term risks for technology are greater than for telecommunications companies
given the impact of more direct and short-term revenue on Huawei's suppliers, "said S & P Global
In a report released today, Mark Habib, financial rating badyst, "Bans On Huawei will hit the technology
More difficult than Telecom, but not enough to move valuations. "
The ban on supply, in our view, will also serve as a catalyst for Huawei and the Chinese government.
The administration, to accelerate its technological investments to reduce dependence on foreign suppliers
for critical components. This could in turn increase competition in the technology sector and
potentially reduce the long-term growth prospects of US technology companies.
"The consequences for telecommunications are likely to vary from one country to another and mainly concern
longer-term investment decisions in 5G, which give operators more time and options for management
fallout, "said Habib.
But with China aiming to become the market leader in the deployment of 5G, the stakes are high. Leadership in
an enabling platform like 5G can help define and shape the evolution of global technology
landscape beyond existing supply chains and capital expenditures on telecommunications equipment. We see
The ability to achieve market leadership in the deployment of 5G is a critical success factor for a dynamic company.
economic environment for countries and regions. It offers opportunities and financial incentives
to develop business and consumer use cases that can increase the global competitiveness of companies.
telecommunications and technology companies, as well as the industries they support.
As history has shown, the successful deployment in the United States of the first 4G networks in the early 2000s
offered a platform for accelerated innovation, continuous investment and sustained leadership
positions for many US technology companies. Examples include Apple's success in smartphones and
tablets, Google's success in advertising through the development of its ubiquitous Android
mobile operating systems, including its Google Chrome browsers, and Qualcomm's patents in
design of wireless mobile phones and mobile chips in baseband. The same was true of the European 2G
adoption in the early 1990s and adoption of 3G in Japan in the early 2000s.
If history is a guide, we believe that the adoption leaders of 5G will have an advantage in the development
of the next wave of technological innovations such as cloud computing, the internet of things and
autonomous vehicles. It's too early to say if the restrictions will slow down China's 5G ambitions or turn against it
and leave countries like the United States behind. It will depend a lot on the coercion imposed on Huawei
and to what extent competing equipment manufacturers are ready to take the lead.
"We believe that the short-term consequences for technology and telecommunication companies are
manageable, long-term issues, especially for technology, could be decisive, "said Habib.
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