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Although some executives have suggested the company could leave the country altogether, Huawei risks being hurt if it's blocked entirely from development in the United States.

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For its part, Huawei has insisted it will be fine if it's forced to leave the United States, but that's not the route it wants to take. In the early s, Huawei undertook a broad "globalization" strategy in an effort to shift its image from a Chinese telecom provider to the global mobile services powerhouse it is today. It was in this spirit that Huawei established its US operations in Plano, Texas, in and began to build out research and development centers across the country.

But business got more difficult for Huawei in the United States the following year, after the US House Intelligence Committee released a report claiming the company poses national security and consumer privacy risks. Huawei has long denied that it poses any threat.

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The White House acted on those fears in May when it added Huawei and 69 of its affiliate businesses to an export blacklist , restricting American companies from selling to it without a license. The Commerce Department last week extended a temporary exemption to that rule , but clarified the exemption is mostly limited to allowing sales of parts for existing products — not new ones.

It also added 45 more Huawei affiliates to the blacklist. But it also created a problem for Futurewei. It meant US Futurewei locations could no longer transfer intellectual property or trade secrets to Huawei's Chinese headquarters or other blacklisted affiliates around the world, the company said.

Now, research and development done at Futurewei can't actually be implemented into new Huawei products. Last month, Huawei laid off around US Futurewei employees — about half of the company's total US workforce — and closed several office locations as a result. At least of those layoffs were from the flagship Santa Clara research facility, according to a WARN notice filed with the state. Remaining Futurewei employees will focus on completing projects that were already underway prior to the restrictions, said Tim Danks, Huawei's president of partnerships and risk management.

For now, the intellectual property for those projects will remain in the United States as the company hopes for a compromise with the White House. But the likelihood of such a compromise happening anytime soon looks slim, Kennedy said. That could mean Huawei's continued investments in US research and development end up going nowhere.


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Depending what those projects are, that could be a real loss for the company. Danks didn't specify the nature of the ongoing projects. But in the past, Futurewei workers have developed technologies related to core areas of Huawei's business, such as a method for machine learning on wireless networks and one for encrypted data transfers on 5G networks, according to filings with the US Patent Office.

Huawei was poised to fight Apple in the US. Now its fate is uncertain

And Danks said it's unclear whether Huawei will invest in new US research projects going forward. Adding to that difficulty: Many American research universities heeded US government warnings and halted partnerships with Huawei in recent months. Huawei had over 50 research partnerships with American universities last year.

But recently, MIT, Stanford, Princeton, University of California San Diego and others have all cut research and funding ties with the company over the national security concerns and its placement on the export blacklist. Stanford said in a statement that it placed a moratorium on partnerships with or gifts from Huawei "out of an abundance of caution" and "are aware of nothing inappropriate arising from past support that Huawei has provided to Stanford. The opportunity to form partnerships such as these are part of the reason foreign companies create US research and development outposts.

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