Trump backpedals giving Huawei 90-day relief after US tech stocks drop

Temporary license will allow operations to continue for existing mobile phone users and rural broadband networks

The Trump administration has allowed limited reprieve for some US customers using Huawei equipment. AP Photo

US President Donald Trump's administration backtracked on immediately banning Huawei, allowing it a three-month reprieve after technology stocks tanked Monday on news Washington would forbid American entities from doing business with the Chinese company.

“This license will allow operations to continue for existing Huawei mobile phone users and rural broadband networks,” Commerce Secretary Wilbur Ross said on Monday. The Commerce Department also permitted Huawei to purchase US products for a 90-day period.

"This latest move by Trump shows just how haphazard his policies are and also how pervasive Huawei goods and technology are," said Jasper Lawler, head of research at London Capital Group. "Yesterday was a big reality check for Trump and shows the incomplete information available for his decision. This won’t be a one-day event. Huawei is entrenched on so many parts of the tech sector, this could take days or weeks to untangle."

Shares of Google-owner Alphabet dropped 2 per cent after the search engine said it would suspend Android services for Huawei.

The temporary reprieve allows Android security updates during the three-month period, but future Huawei phones will not have Google apps.

Shares of Intel, Qualcomm and Broadcom dropped after the companoes also said they would also comply with the US ban.

Huawei has contingency plans to develop its own operating system in anticipation of an escalation in US-China trade tensions and Washington targeting Chinese tech companies, which could disrupt the global supply chain.

"We have prepared our own operating system, if it turns out we can no longer use these systems, we will be ready and have our plan B," Huawei executive Richard Yu told Germany's Die Welt newspaper in March.