Huawei chips away at US ‘security’ ban

Huawei might be persona non grata in the United States but not in the capitals of the European Union.

The heavyweight high-tech group has edged closer to playing a key role in 5G infrastructure projects planned by France and Germany despite Washington pressure on Paris and Berlin.

“We do not target one equipment maker,” Agnes Pannier-Runacher, a junior economy minister in French Prime Minister Edouard Philippe’s government, said earlier this week. “There are three equipment makers active in France.

“Huawei has a 25% market share, there is also Nokia and Ericsson. Samsung is not active yet in France but is interested by 5G. The government will not exclude anyone. We are not following the position of the United States. We will proceed on a case by case basis,” she added.

Last week, telecoms regulator Arcep finally launched its 5G spectrum sale. The decision came after months of intense debate between France’s operators and authorities on how to roll out ultra-fast 5G networks.

It also followed heated discussions in Germany on whether to allow Huawei to help build the next generation mobile system in the world’s fourth-largest economy.

Chancellor Angela Merkel has been under fire not just from the US but from her own party and parliament to ban the telecom giant. Yet freezing out Huawei could have a negative impact on the lucrative German car industry in China.

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A compromise has since been put on the table by her Christian Democratic Union party.

“[Suppliers of 5G must fulfill a] clearly defined security catalog, which includes the exclusion of influence by a foreign state,” delegates agreed at the CDU congress recently.

As the senior party in Merkel’s ruling coalition, the CDU motion carries weight and could yet become government policy.

“I tend to trust ourselves to define high-security standards, higher than with 4G, 3G and 2G, but not to shut out vendors from the beginning,” she told a business lobby on Wednesday.

Opposition in Germany to Huawei has mounted in the past six months. Norbert Roettgen, the head of the Bundestag’s Foreign Affairs Committee, stressed that this was a question of “national security and European ambition.”

“It must be clear, we can’t entrust the German 5G network to the Chinese state, the Communist leadership,” he said.

Still, of the 65 commercial deals that Huawei has signed, half are with European customers.

To combat the de-facto ban in the US, the privately-owned business has upgraded chip production, floated a new operating system in Harmony, in case it is eventually blocked from using Google updates, and launched a new 5G smartphone.

In October, the corporation confirmed that revenue had jumped by 24.4% during the first nine months compared to the same period last year.

The smartphone and 5G infrastructure group reported that profits increased by 8.7%, without revealing further details, while revenue topped 610.8 billion yuan (US$86.2 billion).

“[The firm] has maintained its focus on ICT infrastructure and smart devices, and continued to boost the efficiency and quality of its operations,” a company statement said.

Huawei employs about 190,00 staff worldwide and has sold 200,000 5G base stations despite perceived links with President Xi Jinping’s government and China’s military establishment. The company has strenuously denied both accusations.

Even though the allegations persist, Huawei has forged ahead of its rivals when it comes to 5G.

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Quite simply, this will be the engine driving smart cities and smart factories, built on the massive digital foundations of big data and linked through artificial intelligence, or AI.

“The US does not have a company that can compete with Huawei in the manufacturing of base stations,” Adam Segal, of the Council on Foreign Relations, a New York-based think tank, said.

“But the United States still has strengths to play. US companies can dominate the applications and services that run over 5G, just like they did with 4G. This means a greater focus on software development, especially the code that links devices to towers,” he added.

Ren Zhengfei, the former People’s Liberation Army officer and founder of Huawei, has dismissed that scenario.

In a CNN interview this week, he pointed out that the conglomerate is already the world’s largest telecom equipment manufacturer and is on track to overtake Samsung as the leading smartphone seller.

“In three [to] five years time, Huawei will be flowing with new blood,” Ren said in a memo during the summer. “After we survive the most critical moment in history, a new army would be born. To do what? Dominate the world.”

Let battle commence or sit coortum proelium.