The global supply chain of the Chinese telecom giant Huawei is set to be upended and the almost $105 billion business of the world’s top supplier of telecoms network equipment is set o be rattled by the decision of the United States to blacklist the company. Following an executive order issued by the US president Donald Trump, the US Department of Commerce has said that Huawei and its 70 affiliates would be included in the Entity list which identifies the foreign entities who would bared from doing business with US telecom companies unless a government permission is given to the US companies to do so.

The ban has however not yet been implemented.

The business of the smaller Chinese rival of Huawei – ZTE Corp, was also rattled following a similar ban on it early last year. The ban was later lifted from the company.

But according to analysts, the impact of the ban would have implications to broader range of companies beyond the company itself. They say that in an extreme condition, Huawei would be all but pout out of business or disrupt its business in a minimum situation. Analysts said that the ban would also hit the U.S. suppliers of the company.

U.S. firms including Qualcomm, Intel Corp and Micron Technology Inc were the ones form which Huawei purchased products worth about $11 billion out of the total expenditure of $70 billion done by the company in the entire year of 2018. The ban would eliminate that business for the US firms.

There is also a chance that US companies which significantly depend on the Chinese market for revenues such as Apple could be severely hit by any similar measure by Beijing.

“This is going to be very messy,” a China-based source at a U.S. tech company was quote din the media as saying. A report quoting the source said that Huawei to would face a tough time and added that none of its U.S. suppliers “can be replaced by Chinese ones, not within a few years, at least. By then, they are already dead”.

Last year, the total revenues of the company touched 721 billion yuan ($105 billion). Huawei is also the second largest manufacturer of smartphones. Its last year’s revenues were half the annual sales of South Korea’s Samsung Electronics Co.

But the increasing scrutiny of the company especially by western government such as the US over concerns over national security had put pressure on the business of Huawei. The US has alleged that the telecom equipment supplied by Huawei could have backdoors which can be exploited by Chinese agencies to spy on western countries. These allegations have been refuted by Huawei on multiple occasions.

Huawei curtailing production would also hit a wide range of its suppliers in Asia and Europe. On the other hand, those telecom companies that have depended on Huawei for its their equipment would find themselves in a spot especially since many countries are racing to construct and launch the next generation mobile technology known as 5G.

“Huawei being unable to manufacture network servers, for example, because they can’t get key U.S. components would mean they also stop buying parts from other countries altogether,” an executive at a Huawei chip supplier was quoted in a news report as saying .

“They can relatively better manage component sourcing for mobile phones because they have their own component businesses for smartphones. But server and network, it’s a different story,” the executive said.

The sanctions would mean a “nightmare for China’s 5G” too, said brokerage Jefferies.

It is “ready and willing to engage with the U.S. government and come up with effective measures to ensure product security”, Huawei has said.

“In case of unforeseen events … we definitely have our contingency plan. What we have prepared has already been used in some of our products in the Chinese market”, said Huawei’s rotating Chairman Eric Xu in a recent interview.

(Adapted from Reuters.com)