Action against Huawei ‘undermines world telecoms industry’

Action against Huawei ‘undermines world telecoms industry’, says company

18 May 2020 | Alan Burkitt-Gray

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US government action against Huawei threatens to undermine the entire telecoms industry worldwide, the company said this morning.

Huawei issued the official statement at its annual analysts’ conference, held just a year after the US government added it to its entity list, forbidding its companies or citizens from working with the company.

The Department of Commerce toughened up the rules just last Friday, to include any chip designed using US software or other technology.

Since last year Huawei has rewritten 60 million lines of code and redesigned more than 1,800 boards, said the company’s rotating chairman, Guo Ping (pictured), in the keynote speech of the conference, held live in its Shenzhen headquarters and online.

These have been “busy and chaotic times”, said Guo, adding that the group has increased its R&D spend by 29.8% in the year and increased its inventory by 73.4%.

Guo, who serves as chairman of Huawei for a six-month period in rotation with two others, condemned the “fragmented standards” that he said a split would lead to – and pointed out that this was the situation in the 2G era, when most US mobile carriers used different standards from the rest of the world. Europe, on the other hand, adopted global standards, and while European vendors compete in the market “today no American equipment provider is able to rival Huawei”, he said.

Huawei said it would “need some time to understand the impact” of Friday’s toughening up of the entity list rules better. “We expect our business will inevitably be impacted,” said head of communications Joe Kelly, reading out the statement.

Meanwhile a lawyer with US law firm, Dorsey & Whitney, warned that the new rules may adversely affect US semiconductor companies.

“This new move will affect designers and producers of integrated circuits all over the world but especially in China, Taiwan, Korea and Japan, where most such microelectronics are fabricated today,” said Nelson Dong, senior partner with the firm, and head of its national security group and co-head of its Asia group.

“Indirectly, this move may well force the global semiconductor industry to look away from US suppliers of semiconductor design tools and semiconductor production equipment and even to create new rival companies in other countries, including China itself,” said Dong, who compared the ruling with a similar rule that has already been applied to US satellite companies.

“The resulting avoidance of US suppliers and the vast expansion of alternative non- US suppliers had profoundly negative economic consequences on those US satellite industry suppliers who lost billions in sales and whose global market share fell sharply. Ironically, the US government itself also paid higher prices for its own satellites because now those US suppliers had to recoup their entire R&D costs by selling effectively only to US customers but to almost no foreign customers.”