DAVID: FEARS OF HUAWEI
RETALIATION ALREADY STARTING THE
COMPANY RETHINKING BUSINESS WITH
FEDEX.
COMPANIES LIKE APPLE, NIKE COULD
BE IMPACTED BY THE ONGOING FEUD.
MARKET WATCH TECH EDITOR JEREMY
OWENS, SAYS RETALIATION AGAINST
FEDEX AND APPLE WILL HURT SALES.
THAT IS NOT STOPPING THEM FROM
STARTING IN THAT DIRECTION?
>> SURE, SURE.
HUAWEI WILL REACT IN SOME WAY,
RIGHT?
AND WE'RE GOING TO START SEEING
ANCILLARY EFFECTS FROM OTHER
COMPANIES.
FEDEX NEVER THOUGHT THEY WOULD
GET WRAPPED UP IN THIS.
NOW THAT THEY HAVE, THERE ARE
POSSIBLE BENEFITS FOR THEIR
COMPETITORS.
ETO WHICH DOES LOGISTICS AND
DHL, OTHER COMPANIES IN CHINA.
THAT IS THE KIND OF RIPPLE
EFFECTS WE'RE GOING TO START
SEEING FROM THIS.
DAVID: THERE WAS A COUPLE
EXTRAORDINARY PIECES,
"WALL STREET JOURNAL" PIECE OVER
20 PAGES LONG, A LITANY OF ALL
THE WAYS HUAWEI HAS STOLEN OUR
MATERIAL, OUR SECRETS OVER THE
YEARS.
THEY GET SORT OF LIKE THE
JAPANESE BACK ABOUT 30 YEARS
AGO.
THEY GET VERY GOOD REPLICATING
WHAT WE DO.
THEY'RE NOT VERY GOOD AT
INNOVATION.
INNOVATION WE HAVE IS WHAT THEY
STEAL.
THEY'RE BETTER THAN REPLICATING
THAT THAN WE ARE, HAVE I GOT
THAT RIGHT?
>> KIND OF.
THEY ARE TRYING TO CATCH UP FROM
THE LAST 30 YEARS OF INNOVATION
THAT WE ALREADY HAVE, RIGHT?
THE U.S. STOPPED CHINA BUYING
CHIP COMPANIES BACK TO THE OBAMA
ADMINISTRATION.
THEY JUST HAVE TO HAVE THAT
BACKGROUND, THAT INTELLECTUAL
PROPERTY FROM THE LAST 30, 40,
50 YEARS, WHERE ALL THAT
INNOVATION HAS COME FROM THE
UNITED STATES IN ORDER TO GET TO
COMPETITOR NOW WHERE THEY NEED
TO GO.
DAVID: ONE THING THAT WHERE THEY
HAVE GONE IS IN REPLICATING A
LOT OF STUFF THAT LED THEM TO BE
AHEAD OF US IN 5G.
THEY HAVE 10 TIMES THE NUMBER OF
5G SELL PLATFORMS THAT WE DO,
ET CETERA.
WONDERING TO GO TO THE NEXT
STEP, WHETHER THEY GO TO HAVE
THE INNOVATION AFTER HUAWEI HAS
BEEN CUT OUT OF IT BY THE TRUMP
ADMINISTRATION.
>> THEY SHOULD.
THEY'RE REALLY STILL SOURCING
FROM AMERICAN COMPANIES, GETTING
THOSE CHIPS, GETTING THOSE
COMPONENT.
WE GAVE THEM A 90-DAY SO THEY'RE
TRYING TO PUSH THAT THROUGH.
WE'RE SEEING A LOT OF PURCHASES
OUT OF CHINA OVER THE LAST 18 OR
24 MONTH.
THAT MAY HAVE BEEN HUAWEI
GETTING OUT AHEAD OF THIS.
AS LONG AS THEY HAVE THE
COMPONENTS THEY CAN BUILD THIS,
THEY WILL GO DOWN THE ROAD AS
FAR AS THEY CAN GO, THEY NEED
THE 5G NETWORK AS BAD AS U.S.
DOES.
DAVID: I GOT BACK FROM A TRIP TO
EUROPE.
IT WAS BEAUTIFUL.
EVERYWHERE I WENT IN ITALY,
PARTICULARLY YOU SEE THE SIGNS,
HUAWEI POSTERS UP THERE.
HUAWEI IS HUGE IN EUROPE IN MANY
PLACES.
WHAT HAPPENS IN EUROPE IN THE
STRUGGLE BETWEEN HUAWEI AND THE
UNITED STATES AND 5G?
>> DEPEND ON IF EUROPE -- A LOT
OF HUAWEI ADS YOU SEE FOR
SMARTPHONES, NOT AS BIG IN THE
U.S. BUT HUGE IN EUROPE, RIGHT?
THAT DEPENDS ON WHAT THEY DO
WHEN ANDROID CUTS OFF SUPPORT.
FOR 5G, WE, THE U.S. PRESSURED
EUROPE TO DROP HUAWEI SO THEY
DON'T POTENTIALLY GIFT CHINESE
GOVERNMENT AN IN, IF THEY USE
THE U.S., THEY HAVE TO WORRY
ABOUT THE U.S. GOVERNMENT HAVING
AN INROAD SO EUROPE IS CAUGHT IN
THE MIDDLE.
DAVID: THEY SAY THE ANDROID
OPERATING SYSTEM THEY HAVE BEEN
CUT OFF FROM THAT THEY SAY THEY
WILL DEVELOP THEIR OWN.
THE HECK WITH YOU GUYS, WE'LL DO
OUR OWN OS.
WHAT DO YOU THINK ARE THE
CHANCES COMING UP WITH A GOOD
OPERATING SYSTEM WHAT THEY'RE
LOSING WITH ANDROID?
>> IN LAST HOUR OR SO, REPORTS
THAT THEY WOULD HAVE OPERATING
SYSTEM OUT BY JUNE, PROPRIETARY
OPERATING SYSTEM BY JUNE ARE NOT
ACCURATE.
THEY DON'T PLAN TO HAVE
SOMETHING OUT THAT FAST.
THEY HAVE TO COME UP WITH
SOMETHING.
HONESTLY, WHAT THEY'RE OFFERING
NOW IS THE ABILITY FOR A THIRD
OPERATING SYSTEM BESIDES IOS AND
ANDROID TO HAVE A SOLID HOME,
RIGHT?
HUAWEI IS THE SECOND LARGEST
MANUFACTURER OF PHONES RIGHT NOW
ABOVE APPLE, LINE SAMSUNG.
SO, IF THEY PUT A NEW OPERATING
SYSTEM IN, NATURALLY HAS A BASE,
THAT COULD DEVELOP A THIRD ONE.
BUT ARE THEY FAR ENOUGH ALONG TO
PUT THAT OPERATING SYSTEM.
DO THEY HAVE PROPRIETARY
OPERATING SYSTEM TO GO, WOULD
THEY BUY ONE, LOOK FOR SOMETHING
ELSE.
THAT IS QUESTION HUAWEI IS
PUTTING OUT RIGHT NOW.
THE ANSWER IS FASCINATING FOR
THE FUTURE OF SMARTPHONE
OPERATING SYSTEMS.
DAVID: VERY QUICKLY, DO WE END
UP, JEREMY, PUT ON THE MAGIC CAP
WHERE YOU SEE INTO THE FUTURE.
DO WE ENDP WITH A DEAL THAT
GIVES HUAWEI A BREAK FROM WHERE
WE ARE NOW WITH HUAWEI?
>> I DON'T KNOW.
I WAS FASCINATED BY THE FACT
THERE WAS A SIGNAL THAT WE COULD
WRAP HUAWEI INTO THE REST OF THE
U.S. CHINA TRADE NEGOTIATIONS,
RIGHT?
DAVID: YEAH.
>> I DID NOT SEE THAT.
I SAW THOSE AS TWO DIFFERENT
TRACKS.
HUAWEI GOING MORE WITH WHAT
WE'VE DONE EIGHT TO 10 YEARS TO
PROTECT OUR TECH INTELLECTUAL
PROPERTY AND TRADE BEING
SOMETHING COMPLETELY DIFFERENT.
BRINGING THOSE TWO IN TOGETHER I
HAVE NO IDEA WHERE THAT WILL GO,
WHAT WILL LEAD TO THAT I WOULD
HAVE TO THINK YOU CAN'T WRAP
HUAWEI IN, ONCE YOU DO, WHAT
HAPPENS THEN WITH HOW FAR WE
HAVE ALREADY GONE DOWN THIS
ROAD?
NO TELLING IF THAT GETS WRAPPED
INTO THE TRADE DEAL WHERE WE GO
FROM THERE OR GO BACK TO STATUS