Monday , December 6 2021

Growing security fears hold global ambitions with Chinese tech giant Huawei


While a Huawei executive faces any US charges for trade with Iran, the Chinese technology giant collides with being the leader in next-generation telecom with security issues abroad.

Australia and New Zealand have prevented Huawei Technologies Ltd. as a fifth-generation network provider. They joined the US and Taiwan, which limits the use of technology from the largest global network switcher. This week, Japan's cyberspace agency Huawei said, and other providers that are considered to be risky will be restricted to government purchases.

No one has released evidence of incorrect action by Huawei, denying that there is a risk and has run a laboratory with the UK government since 2010 to conduct security investigations of its products. But the accusations, due to increasing excitement over Chinese technology's ambitions and spying, threaten their ability to compete in a sensitive area that bearers are preparing to invest billions of dollars.

"This is something that definitely concerns Huawei at this stage, because there is a political angle to that and a business," said Nikhil Bhatra, a senior researcher for IDC, a consultation.

China's first global tech brand

Huawei is not a regular electronics supplier. The company, founded in 1987 by a former military engineer, is China's first global tech brand and a national champion head of an industry. Beijing, as part of its efforts to transform the country into a technician, promotes. It has China's largest enterprise research and development budget of $ 13 billion in 2017 – 10 percent more than Apple Inc.'s – and foreign customers can withdraw a multi-billion dollar loan from the official Chinese Development Bank.

It puts Huawei at the heart of tribes over the technological aspirations of the ruling Communist Party, competition with Western economies and ties between companies and government, including possible spying.

An EU civil servant Andrus Ansip expressed concern that Chinese rules requiring telecom equipment providers to cooperate with intelligence services would mean possible "mandatory backdoors" in computer or telecom systems.

"Should we be worried about Huawei and other Chinese companies? Yes, I think we must be worried," said Ansip, Trade Block Vice President for a Digital Single Market.

A salesman looks at his smartphone at a Huawei store in a Beijing shopping mall on July 4, 2018. Letting the Chinese company Huawei Technologies build Canada's 5G wireless network could allow Beijing backdoor access to reveal data about Canadians, alerting security analysts. (Mark Schiefelbein / Canadian Press / Associated Press)

The company says it is employed and operates independently. It denies that it designs equipment to allow interception or controlled by the Communist Party – a state critic including some US senators say is doubtful in China's state-dominated system. The company notes that it uses the same global components suppliers as Western manufacturers.

"There is not a single piece of evidence against the company ever," Huawei said in a written answer to questions.

The company is "most investigated supplier of telecom equipment," said the statement. It is said that foreign officials visit regularly to see "the lengths we go to insure them about the integrity of our technology."

5G showdown

Huawei, headquartered on a lush campus in Shenzhen, near Hong Kong, has been working at 5G since 2009 and is one of the largest suppliers of technology together with Sweden's LM Ericsson and Finland's Nokia Corp.

The company whose technology has been accepted stands for billions of dollars from sales and license fees.

5G promises more than just faster mobile phone service. It is designed to support heavily expanded networks of devices from internet-powered cars and medical equipment to factory robots and nuclear power plants. The annual sales of 5G network equipment is expected to reach 11 billion US dollars in 2022, according to IHS Markit.

This makes it more politically sensitive, raises the potential cost of security errors and requires more confidence in the suppliers.

Even a "very small" risk can disqualify a supplier, says Andrew Kitson, Head of the Technology Industry for Fitch Solutions.

But Kitson sees commercial motives behind the accusations against Huawei. He said that many come from American and European suppliers who lose market shares to Chinese rivals.

"There has never been any evidence," said Kitson. "They just have to make some insinuations for other governments to sit up and think, hang on, even if there is no evidence, there is too much of a risk."

Growing problems

Huawei met a new meeting on December 1 when his finance chief Meng Wanzhou was arrested in Vancouver on US charges of letting for banks deal with Iran.

Huawei is more politically important than ZTE Corp., a Chinese rival who was almost out of business after Washington blocked it from buying American technology over exports to Iran and North Korea. US President Donald Trump restored the asset after ZTE paid a US $ 1 billion fine, replaced its managers and hired US-accredited compliance officer.

Huawei chief financial officer Meng Wanzhou, right, arrives at a parole office with a member of her private security features in Vancouver on December 12, 2018. (Canadian press / Darryl Dyck)

It will not work with Huawei, which is "the key to Beijing's ambitions to lead globally" at 5G, said the Eurasia Group in a report. It said that Chinese leaders would see an attempt to introduce ZTE-style controls as "equivalent to an open-ended technology war."

Huawei's US business was vaporized after a 2012 Congress Report, which identified the company's and ZTE's security threats. That same year, Australia banned it from bidding on a national high-speed broadband network.

Taiwan, the autonomous island of Beijing claims as its territory and threatens to regularly attack, bounced in 2013 on Huawei and other Chinese telecom technology. Legislature is discussing expanding controls.

Increasing sales

Elsewhere, Huawei delivers phone carriers in Asia, Africa and Europe. The company says that it serves 45 of the 50 largest global telecom operators. Global sales for 2017 increased 16 percent to 92.5 billion US dollars, while profits rose 28 percent to 7.3 billion US dollars.

Huawei accounted for 28 percent of last year's $ 32 billion global mobile network sales, according to IHS Markit. Ericsson was 27 percent and Nokia had 23 percent. ZTE, South Korea's Samsung Electronics Corp and other suppliers made up the rest.

Asked how the security issues affect its 5G business, Huawei said that the year's total revenue – which also includes the global smartphone brand number 3 and a business entity – should exceed $ 100 billion. It would be a profit of 8 percent over 2017.

Washington presses allies to avoid Huawei, but Germany, France and Ireland say they have no plans to ban 5G network providers.

Huawei "has an important place in France" and "its investments are welcome," said the country's economist Bruno Le Maire, December 7, according to news reports.

The company has an agreement on field testing 5G equipment with Deutsche Telekom, Bell Canada, France Bouygues, Telecom Italia, India's Bharti Airtel and carriers in Singapore, South Korea and Ireland.

The Chinese Ministry of Foreign Affairs complained critics were "hyping so-called threats" to prevent Huawei's operations without evidence.

As for Ansip's concern for interception, "we have no such teams that allow" backdoors, says a spokesman, Lu Kang.

IDC's Bhatra said that excluding Huawei would leave countries with only two major 5G suppliers, Ericsson and Nokia. It would limit competition, raise prices and perhaps slow down innovation, he said.

General analysts already say that telecom equipment costs are costing more in the US and other markets that lack the cheapest Chinese competitors.

"There are quite widespread consequences," Bhatra said.

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