The tug of war over which companies should be allowed to have their technology built into the heart of the world’s 5G network cores is spilling over to the wider tech industry, with firms such as Broadcom and even Google at risk of suffering business harm. 5G is going to become incredibly crucial to the very fabric of our modern society, so there’s a lot at stake.
I’m sure you know the background, but just to recap. Under Chinese law, the Chinese Government can compel Chinese companies to provide access to their technologies and data. Huawei maintains that it would ignore any such instruction, but is that realistic? Can anyone really envision a Chinese firm not bowing to a diktat from their communist leaders in Beijing?
This is at the heart of concerns in many Western countries. Australia was first out of the blocks with legislation that prevents technology from any company subject to laws such as China has from contributing to critical national infrastructure. New Zealand has taken a similar stance, and now the US has joined suit. On 16 May, the US Government placed Huawei (and more than 60 affiliated companies) on an ‘Entity List,’ the upshot being that Huawei would need to seek permission in order to buy any US-made components for use in its products. In a surprise move, less than a week later Google said that Huawei would no longer have access to updates on Google’s Play Store, nor would it receive updates to the Android operating system. This was followed on 21 May by the US Commerce Department temporarily easing the restrictions, giving Huawei until August to update its handsets and other gear.
This has all played out against a backdrop of the ongoing tariff war between the US and China, as well as the charges laid (on suspicion of violating sanctions against Iran) against Meng Wanzhou, Huawei’s CFO, and the US Government’s attempt to have her extradited from Canada.
The UK, of course, is under intense pressure from Australia, the US and others to join the rest of the Five Eyes countries and ban Huawei gear from UK networks. The caretaker prime minister, Theresa May, has said that that will be a decision for the next prime minister to make.
The US restrictions on Huawei’s access to US technology is a double-edged sword. For instance, late last week chipmaker Broadcom forecast that the dispute would slash US$2 billion from its sales this financial year. Ouch. That’s a heavy hit to a major US company from the US’s own decision. Other chipmakers such as Qualcomm and Intel are taking hits on the stock market, too.
And Huawei — the world’s second-largest maker of smartphones — is not taking the fight lying down. Google’s restriction on Huawei’s access to Android has prompted the Chinese company to accelerate its plans for its own operating system; it has begun applying for trademark protection around the world for its Hongmeng OS. And in what is clearly a strategic move, Huawei reportedly has demanded US$1 billion in patent payments from US telco giant Verizon — and that could be just the start, as Huawei reportedly holds more than 56,000 networking, telecommunications and other patents around the world.
So where will this all end up? It’s anybody’s guess. As far as the US situation goes, given the unpredictability of the US political leadership at present, there’s every chance that a surprise deal might be struck on the tariff situation and Huawei might be let back into the fold — stranger things have happened lately. There might be business sense in that, but it still would not deal with the security concerns of allowing Huawei’s gear to be incorporated into the 5G network. Certainly, it’s not going to happen in Australia under Australian legislation. Nor in New Zealand. And maybe not in the UK (although that country has so far decided that Huawei gear can be used in non-core parts of its 5G network.)
The coming 5G networks are going to be so vital to the functioning of modern cities, businesses and government services that it’s important our leaders make the right decisions now, rather than having to mop up a mess later on. Balancing business needs, security issues and national security concerns has never been harder.