US sanctions backfire: Huawei thrives while American companies lose revenue
Huawei has developed its own operating system, built its own chips, has independent supply chains, and boosted its global market share in telecom equipment while entering new markets. Meanwhile, the US tech companies lost $33 billion in sales, and the Chinese government's retaliation is hurting the American economy, says think tank ITIF.
The Information Technology and Innovation Foundation (ITIF) estimates that the US sanctions against Huawei failed to achieve their intended goals and instead strengthened the company.
“Huawei is a more innovative company today than it was before the US government sought to choke its supply chain,” writes Rodrigo Balbontin, an associate director covering trade, IP, and digital technology governance at ITIF.
“US techno-economic power is weaker than most think, and sanctions often hurt US competitiveness more than China’s.”
Since around 2018, the US has gradually banned Huawei product sales and encouraged other nations to follow. The result?
Over 3.2 billion people outside China live in countries that use Huawei’s 5G equipment.
Huawei’s global market share in telecom equipment increased from 32% in 2018 to 34% in 2024. The ITIF report about backfiring export controls also provides a “conservative estimate” that Intel, Qualcomm, Teradyne, and other US technology companies lost more than $33 billion in sales to Huawei between 2021 and 2024.
And the Chinese tech giant has achieved a lot more:
- In 2019, Huawei launched its HarmonyOS, which now has nearly a billion users and is compatible with mobiles, tablets, and laptops. It now directly threatens Google’s, Microsoft’s, and Apple’s global market shares.
- Huawei said in 2023 that it had replaced more than 13,000 components and redesigned over 4,000 different circuit boards.
- Huawei reportedly can substitute Nvidia’s H20 chip, a specific model that meets the US government’s requirements for exporting semiconductors to China, limiting Nvidia’s global sales.
- The bans lowered market share in smartphone shipments, but it’s now recovering, and participation in the Chinese market was boosted.
- Huawei’s smart driving solutions have been implemented in at least half a million cars, and some analysts suggest its technology is superior to Tesla’s.
- Huawei’s MateBook X Pro and Watch D products are often considered as good as or even better than those from Western companies.
Huawei’s senior executive boasted of achieving an entirely US-independent tech ecosystem.
Huawei, anticipating US actions, has been heavily investing in offsetting them since 2012, and increasing research and development investment proportionally more than any other major tech company.
“Sanctioning Huawei and attempting to cripple the company has proven to be hubristic and self-defeating – US techno-economic power is weaker than decision-makers in Washington might think,” ITIF said.
The US attempts to cripple Huawei didn’t take into account China’s support, including financial grants, direct procurement, preferential treatment for strategic national initiatives, and others.
ITIF argues that US policy has shaped Huawei’s innovation path, which erodes America’s competitive edge.
“China is rapidly catching up with the United States in robotics, electronic displays, and artificial intelligence, and it lags behind in machine tools and semiconductors. These are all critical links in Huawei’s supply chain.”
Western tech companies may experience the Nokia or Ericsson moment, which “were ultimately unable to offset the unfair competition against Huawei and ZTE in 5G.” ITIF expects Google and Microsoft's market share in the global market to decline.
What can the US do?
ITIF argues that the US needs a more realistic approach when challenged by Chinese techno-economic power.
“The fact that the United States is incapable of crippling a company such as Huawei does not preclude the need to take actions against Chinese mercantilism,” Balbontin said.
The analyst believes that US policymakers should consider pressing more countries to ban Huawei products while also considering the broader impacts of export control measures on US firms and the economy.
“Export controls should be applied jointly with allies, or not at all,” the expert said.
The author suggests that the current US-China techno-economic competition differs significantly from earlier episodes in which the US had a clear edge, and a modern policy framework should pair import bans with “targeted export controls on advanced technologies.”
“US policymakers cannot assume that the US maintains global leadership in advanced sectors. American competitiveness is faltering and requires a coordinated strategy, led by the federal government, to reverse this trend.”
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