China’s biggest technology firm, Huawei, has risen to global prominence as a leader in 5G, the much ballyhooed, next-generation wireless technology. It’s also become a major target for the US as China’s technological prowess has grown along with its ambitions.
The US has been trying to convince its allies — including Canada and Germany — to ban Huawei equipment from their networks on worries about spying. So far only a handful have joined the boycott; the UK refused. The Trump administration also moved to further curtail Huawei’s access to vital components by barring any chip maker anywhere using American equipment from supplying Huawei without US government approval. Underlying the wrangling is the question of who will take the lead in the nascent, “everything-connected” era, and who gets left behind.
1. Why does the US have an issue with Huawei?
US government officials say Huawei is dangerous in part because it could use its growing share of the telecommunications equipment market to spy for the Chinese government. In 2012, a report by the US house permanent select committee on intelligence tagged Huawei and ZTE as potential security threats. US concerns about Huawei drove the 2018 decision by President Donald Trump to block a hostile takeover bid from Broadcom, based at the time in Singapore, for the US chip maker Communal. The transaction could have curtailed American investments in chip and wireless technologies and handed global leadership in those spheres to Huawei. Such concerns have expanded as carriers prepare to spend billions of dollars on new 5G networks, which will collect data and enable services on an unparalleled scale.
2. How important is Huawei?
In just over three decades, it’s grown from an electronics reseller into one of the world’s biggest private companies, with leading positions in telecoms gear, smartphones, cloud computing and cybersecurity, and substantial operations in Asia, Europe and Africa. Huawei generated 850-billion yuan (US$122-billion) in sales in 2019 — more than Boeing. It’s ploughed billions of dollars into 5G and broke into the top 10 recipients of US patents last year. It has helped build 5G networks in more than 10 countries and expects to do the same in another 20 in 2020. US sanctions spooked some Huawei customers and suppliers globally, while Chinese consumers and carriers rallied to its side.
3. Why is its equipment a security issue?
The US government — like the Chinese and others — is wary of employing foreign technology in vital communications for fear that manufacturers could install hidden “backdoors” for spies to access sensitive data, or that the companies themselves would hand it over to their home governments. US secretary of state Michael Pompeo has said the US might hold back intelligence-sharing with Nato allies if they use Huawei equipment, a threat met with some scepticism. The 5G networks are of particular concern because they will go beyond making smartphone downloads faster to enable new technologies like self-driving cars and the Internet of things. UK-based carrier Vodafone Group was said to have found and fixed backdoors on Huawei equipment used in its Italian business in 2011 and 2012. While it’s hard to know if the vulnerabilities were nefarious or accidental, the revelation dealt a blow to Huawei’s reputation.
4. Who’s using Huawei and who’s not?
Japan and Australia are among a handful of countries that have joined the US boycott, with Vietnam quietly following suit. But Huawei does have plenty of supporters. Its equipment tends to be less expensive than alternatives from Nokia and Ericsson and is often higher quality. The company has won 5G customers in Russia, the Middle East and Southeast Asia, including the Philippines and Thailand. In Malaysia, the prime minister has trumpeted the advantages of Huawei’s gear, saying his country will use “as much as possible”.
5. What’s going on elsewhere?
The UK will allow Huawei to help build Britain’s 5G system, though it banned the company from some core parts of the network. Its intelligence agencies reportedly argued that Huawei is a manageable risk. Some companies warn that a full ban would delay the roll-out and cost hundreds of millions of pounds. Norway decided against a ban, leaving the choice to individual companies; so far two have gone with Ericsson. In the European Union, there are signs of a coordinated balancing act. German Chancellor Angela Merkel is grappling with a potential revolt by lawmakers who want to effectively ban Huawei equipment. China’s ambassador to Germany threatened Berlin with retaliation if such a ban were adopted, citing the millions of vehicles German car makers sell in China. Brazil has said it isn’t excluding anyone from bidding. South Africa also has no intention of limiting Huawei’s access to the market.
6. What else has the US done?
The US has moved to curb Huawei’s ability to sell equipment in the US and, more significantly, to buy parts from US suppliers, by adding Huawei to a commerce department blacklist in 2019. Accusing the company of seeking to “undermine” those export controls, the department on 15 May imposed further restrictions on chip makers using American gear in designing or producing semiconductors, meaning suppliers such as Taiwan Semiconductor Manufacturing Co will have to cut off Huawei unless they get a waiver from Washington — or potentially face penalties. The Federal Communications Commission prohibited the use of federal subsidies to buy equipment made by Huawei and ZTE and said it would consider requiring carriers now using the products to remove them.
7. What’s going on in Canada?
In December 2018, at the request of the US, Canadian authorities arrested Huawei’s chief financial officer, Meng Wanzhou, who’s also the daughter of the company’s founder, Ren Zhengfei. The US is seeking her extradition as part of a criminal case alleging that she conspired to defraud banks into unwittingly clearing transactions linked to Iran in violation of US sanctions. Both Meng, who is also deputy chairwoman, and the company have denied wrongdoing. Canada is still deciding whether or not to allow Huawei to play a bigger role in developing 5G.
8. Who else has accused Huawei?
In 2003, Cisco Systems sued Huawei for allegedly infringing on its patents and illegally copying source code used in routers and switches. Huawei removed the contested code, manuals and command-line interfaces and the case was dropped. Motorola sued in 2010 for allegedly conspiring with former employees to steal trade secrets. That lawsuit was later settled. In 2017, a jury found Huawei liable for stealing robotic technology from T-Mobile US, and on 28 January 2019, the justice department indicted Huawei for theft of trade secrets related to that case. The same month, Poland, a staunch US ally, arrested a Huawei employee on suspicion of spying for the Chinese government. Huawei fired the employee and denied any involvement in his alleged actions.
9. What does Huawei say?
That US restrictions are not about cybersecurity but are really designed to safeguard American dominance of global tech. It has repeatedly denied that it helps Beijing spy on other governments or companies. But bracing for continued pressure, it outlined plans to shake up its management ranks as revenue growth slowed. The company, which says it’s owned by Ren as well as its employees through a union, has in recent years begun releasing financial results, spent more on marketing and engaged with foreign media in an effort to boost transparency. Ren has become more outspoken as he fights to save his company. While he said he was proud of his military career and Communist Party membership, he rejected suggestions he was doing Beijing’s bidding or that Huawei handed over customer information. In March 2019, Huawei went on the offensive, filing a lawsuit in federal court against a statute that blocks US government agencies from using its equipment.
10. Are other Chinese companies feeling the heat?
Yes. In October, the Trump administration placed eight other Chinese tech giants on its blacklist, accusing them of being implicated in human rights violations against minority Muslims in the country’s Xinjiang region. They included Hikvision and Dahua, which by some accounts control as much as a third of the global market for video surveillance; SenseTime Group, the world’s most valuable artificial intelligence start-up; and fellow AI giant Megvii Technology. ZTE almost collapsed after the US commerce department banned it for three months in 2018 from buying American technology. The US justice department has charged state-owned Fujian Jinhua Integrated Circuit Co, its Taiwanese partner and three individuals with conspiring to steal trade secrets from Micron Technology. — (c) 2020 Bloomberg LP
from TechCentral https://ift.tt/2AzD5HK