Trump fires ballistic missile into the heart of Huawei

16 May 2019 | Alan Burkitt-Gray

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Huawei will be unable to buy technology from any US company without a licence from the US government, following a pair of remarkable orders from Washington DC.

First, President Donald Trump issued an executive order on the “information and communications technology and services supply chain” which gives him and the rest of the US government unprecedented power to ban any business dealing.

The wide-ranging order applies not just to US companies and people but “any person in the United States”. Any of them will be banned from doing business with named companies if they are in the supply chain.

Huawei, the world’s biggest maker of telecoms equipment, buys $11 billion worth of US-made technology a year.

Neither China nor Huawei were named in that order, but the Director of National Intelligence has 40 days to make an initial assessment. Potentially the government can name any telecoms equipment vendor, handset maker, software company or carrier in the world.

But Huawei has been named by the Department of Commerce (DoC), which last night added the company to its entity list – a list of restricted companies that US people and companies are banned from doing business with.

This is the same tactic the DoC took against Chinese rival ZTE in 2017-18 when it discovered the company had been smuggling telecoms kit to Iran against a US embargo. ZTE capitulated, agreeing last year to pay a $1.4 billion fine, to change all its top management and to have a US legal overseer for 10 years.

If it hadn’t done the deal the company would have had to close – because companies such as Cisco, Dell, Intel, Microsoft, Oracle, Qualcomm and Symantec were banned from supplying hardware and software. ZTE was removed from the entity list when it agreed the deal with the DoC.

Huawei reacted quickly to the news. A Huawei spokesperson said: “We are the unparalleled leader in 5G development. We are ready and willing to engage with the US government and come up with effective measures to ensure product security.”

The official added: “Restricting Huawei from doing business in the US will not make the US more secure or stronger; instead, this will only serve to limit the US to inferior yet more expensive alternatives, leaving the US lagging behind in 5G deployment, and eventually harming the interests of US companies and consumers. In addition, unreasonable restrictions will infringe upon Huawei’s rights and raise other serious legal issues.”

One of the challenges presented by the Trump and DoC rulings is that Huawei is embedded in telecoms development, through alliances such as the Open Networking Automation Platform (ONAP), in which AT&T, China Mobile, Huawei and ZTE are leading members.

Huawei is not a member of the O-RAN [open radio access network] Alliance, but China Mobile and China Telecom are, and so is ZTE – as well as AT&T, Sprint and Verizon.

What happens to those collaborations and the intellectual property that the member companies are sharing – essential to the future telecoms supply chain?

Huawei, ZTE and other Chinese companies take part in the GSMA’s events around the world – and the London-based GSMA’s commercial arm is  in Atlanta. It’s unclear how Trump’s order will affect these events. Next month the GSMA is running the Shanghai version of Mobile World Congress, with Microsoft and Syniverse among the exhibitors alongside Huawei. 

What happens to the global development of 5G, to which Huawei, ZTE and the China Academy of Telecommunications Technology have 2,081 patents – 31% of the total. Will 5G networks from 2020 onwards be able to use Chinese patents or will they have to look for workarounds? The industry is trying to work out what the implications will be.

In advance of Trump’s statement on Wednesday evening, the Canadians stepped into the argument on Huawei’s side – or at least taking a neutral position. Ralph Goodale, the public safety minister, said the federal government would review “all potential suppliers” for 5G from the points of view of both technology and national security. “We want to make the very best decision for Canada with respect to the technology and also on national security. Our national security will not be compromised,” he said.

In Europe, Huawei said its aim is “to foster dialogue and to bring stakeholders together on relevant digital issues”.

The company is hosting an event next Tuesday at the Huawei Cybersecurity Centre in Brussels “where we will directly address the decision made by the US government alongside other key issues surrounding the deployment of 5G in Europe”.