Shares of Google parent Alphabet declined more than 2% as of midday trading Monday after the U.S. technology giant cut the world’s second biggest smart phone maker, Huawei, off from its Android mobile software ecosystem, per media reports.
The move does not affect users of existing Huawei devices, much of which are deployed in developing regions. They’ll continue to be able to download app updates from the Google Play store. However, for new devices, “Huawei will only be able to use the public version of Android and will not be able to get access to proprietary apps and services from Google,” a Google source told Reuters, which was first to report the news.
Google’s move came after the Trump Administration last week declared a national emergency, claiming that “foreign adversaries,” most notably including Chinese tech company Huawei, “are increasingly creating and exploiting vulnerabilities in information and communications technology and services.”
That move directly impacted around 40 U.S. telecom operators that rely on Huawei products.
But subsequently, the U.S. Department of Commerce went a step further, placing Huawei and 70 of its affiliates on the Bureau of Industry and Security’s (BIS) “entity list.” This bans Huawei from buying hardware and software from U.S. companies without government approval.
This will directly impact Huawei’s supply chain—which, of course, not only hurts Huawei, but all its U.S. vendors. In fact, Huawei lists 33 U.S. companies as major suppliers.
Qualcomm, for instance, is down more than 5% on the Nasdaq Monday. Broadcom is also off more than 5%. Microsoft is off around 2%.
Last year, a similar ban on U.S. component sales to ZTE nearly drove that Chinese tech company out of business.
The Trump Administration’s ramp-up on pressure comes as governments and their operator constituents across Europe have resisted calls to ban Huawei from ongoing 5G network buildouts, also according to Reuters.