The ongoing fight between the US government and Chinese telecom giant Huawei is escalating further, with important news that the Trump Administration is preparing to deliver a potentially crippling blow to the company. Specifically, the US Commerce Department is planning to ban any American-made chip technology from reaching Huawei’s hands and will prohibit Taiwan Semiconductor Manufacturing Company (TSMC) — one of Huawei’s main suppliers — from shipping chips to Huawei. Finding a reliable flow of chips from elsewhere will take time for Huawei, which is the largest private company in China according to Xinhua.

Brief Summary of the US-Huawei Dispute

The US believes China’s authoritarian communist government uses Huawei as a backdoor method to spy around the world. An upcoming full ban on Huawei is currently set for May 15, partly to allow providers who rely on Huawei — especially in the rural US — to find alternatives. The US says Huawei steals trade secrets and engages in numerous bad faith actions as a proxy of China’s government. The US government has consequently put in strong efforts to block Huawei from being permitted to set up 5G networks which it says would significantly compromise state security.

There is not conclusive, publicly-available evidence of Huawei spying or transferring information to the Chinese government, although in January, 2019, Huawei employee Wang Weijing was arrested in Poland and charged with espionage. The company subsequently let him go. Huawei was blacklisted as a national security threat by the US last May.

Huawei was established by People’s Liberation Army (PLA) engineer Ren Zhengfei in 1987 and is headquartered in Shenzhen, China. It makes telecom equipment and infrastructure like broadband and mobile networks and produces smartphones and various consumer electronics such as smart TVs, tablets and computers. Boosted by years of massive investment from the Chinese Development Bank and Export-Import Bank which has helped fund its expansion all over the African continent, Huawei steadily rose in prominence and dominance and even began to overshadow Western firms. In July, 2018, Huawei surpassed Apple and became the second-biggest smartphone maker on the planet after first-place Samsung.

The Arrest of Meng Wanzhou

Ren’s daughter and CFO Meng Wanzhou was arrested in late 2018 by Canadian police while connecting to a flight at Vancouver International Airport. She was detained on behalf of the United States who wanted her to be extradited stateside for allegedly breaking their Iran sanctions in her Huawei business dealings though a subsidiary called Skycom. Meng is currently under house arrest in Vancouver and her next hearing is scheduled for March 30, however the extradition process could take years before being resolved and Meng has also counter-sued the Canadian government for their actions. Huawei also sued the US in March of last year for banning its products from use by federal government agencies.

In addition to US opposition, Huawei has been banned from New Zealand’s 5G network and that of Australia and the US, as mentioned. Canada is also reassessing whether Huawei will be permitted to be involved in its next generation of mobile networks and the EU has expressed concern as well. The UK has allowed Huawei to be involved in 5G although it won’t be involved in “core functions”, with the UK’s intelligence services saying security issues from the supplier are not overly serious and are “manageable.”

What Happens Next With the Semiconductor Ban?

In the coming weeks the semiconductor industry will try to get the Trump Admin to back down or weaken its ban, but the Administration wants the plan moved forward as fast as possible. Previously even tougher measures were wanted, but Trump said they were going too far on the restrictive side and could cut down on business opportunities in the future. America’s top three semiconductor producers make up almost half the world’s semiconductor chip revenue, which would starve Huawei for good options and cut off their supply chain to Qualcomm, Intel, Applied Materials and other chip makers.

The potential loophole, however, is that US semiconductor makers say the rules wouldn’t hit them if they don’t make the chips in the US so it would still be possible to continue business by outsourcing manufacturing. This loophole, and the desire to balance trade with security (despite the fact that doing so may not be possible) shows the complexity and difficulty of decoupling one link from the global supply chain of technology infrastructure — even if it is a genuine threat. Huawei made a lot of its biggest progress under former Chinese leader Hu Jintao and they are still going strong.

As a likely arm of the sinister Communist Party of China with its concentration camps full of Uyghur, Kyrgyz and ethnic, Muslim minorities and brazen lies and coverups about coronavirus that allowed the disease to spread, not to mention its ongoing, overall untrustworthiness there is no reason to give Huawei the benefit of the doubt; however, there is also no reason to respond to this conflict from a short-term viewpoint and engage in tit-for-tat. While the chip restrictions would certainly show that the Trump Administration is willing to play hardball in the short-term they won’t necessarily completely hobble Huawei further down the road — especially in the developing world — and are likely to simply increase China’s state subsidy of the giant and its expansion into non-US-aligned nations.

They also don’t solve the issue of how the US will effectively compete from a big picture perspective. Although the chip restriction measures are one step in the right direction, taking proactive action to crowd out Huawei from expanding and boosting US capabilities and soft power while simultaneously hitting Huawei’s chip supply would be a superior tactic than focusing in on punitive measures in the midst of a chaotic pandemic where face masks and ventilators are hard to come by.

Indeed, the Huawei dispute points to the many contradictions and vulnerabilities at the heart of the Trump Administration, which has shown itself to be consistently frenetic, reactive and erratic in its approach to almost every challenge facing the United States and the world.

L'articolo US Plans to Hit Huawei Even Harder by Restricting its Chip Supply proviene da InsideOver.

Maverick technology mastermind, or serpentine subordinate of the Chinese state? Ren Zhengfei, founder of Huawei, splits opinion. He’s grown the telecom firm to a $100bn behemoth, but his ties to the Communist Party are clear, and he – like any Chinese citizen, rich or poor – is obligated to do its bidding. Convinced of his skulduggery, Trump’s America has blacklisted Huawei; but now, unexpectedly, a peace offering of sorts from Ren. Huawei is willing to sell its network technology to US firms, he announced last week, a move that could – in principle – allay deep-set surveillance fears.

Adjacent to the spiralling trade war with China, Washington’s feud with Huawei has become a totem of worsening East-West relations. As he’s piled on the commercial tariffs, so too has Mr Trump restricted American involvement with the technology giant. Security fears drive the action, the White House says, arguing that Huawei’s equipment may contain ‘back doors’ for Beijing snoopers. Alongside government agencies, US businesses have been ordered not to deal with the Chinese company.

The impasse is not insurmountable, though, says Ren, who has forwarded a novel solution – licensing Huawei’s 5G technology to American firms for a one-time fee. He envisages a win-win scenario – the US being able to “build up their own 5G [network]”, while Huawei benefits from the growth in sales and competition. On the surface, it’s a promising offer. America has no indigenous 5G network manufacturer, and the only alternatives to Huawei – Nokia and Ericsson – are far less affordable.   

More importantly, his proposal would also pacify worries around security, Ren argues. American clients would be able to review and modify their ‘source code’, meaning neither Huawei nor the Chinese government could, hypothetically, gain access to the network. It is, in effect, an offer of transparency – every nook and cranny where a back door may be hidden would be open for inspection.

It’s an unprecedented move, and one that reflects Huawei’s hastening efforts to break the deadlock. The usually camera-shy Mr Ren has been wheeled out time and again this year, part of the company’s concerted charm offensive. A glance at their books explains why. Huawei made a barnstorming $105bn in sales last year, roughly half of which were from its smartphone range. Like most non-Apple devices, their handsets run Android software. Google, the platform’s maker, is California-based, and so is subject to Washington’s Huawei embargo. The firm is working on a proprietary replacement, HarmonyOS, but a mighty hit to the bottom line is anticipated.

That, of course, is of no concern to those with security fears. Critics say that, while open to scrutiny, Huawei’s code would have to be combed through again and again after every (frequent) update. And even if the technology was declared clear, Western firms would be adopting a platform intimately familiar to Chinese hackers. A worrying ‘dependency’ on Huawei to maintain the network could also emerge, experts warn.    

“An American company that installed such equipment would be highly dependent on Huawei engineers and software experts to keep the system running,” said Claude Barfield of the American Enterprise Institute, a think-tank. “Moreover, 5G technology will present enormous, even intractable, cybersecurity issues – with multiple entry points into the system and almost continuous software upgrades”.

Regardless, US companies who stand to lose millions from the ban have been voicing their dissent. Microsoft, one of America’s biggest businesses and supplier of Huawei’s computer software, has been pressing regulators to explain the embargo – but to no avail. “Oftentimes, what we get in response is, ‘Well, if you knew what we knew, you would agree with us,’” said Microsoft President Brad Smith recently. “And our answer is, ‘Great, show us what you know, so we can decide for ourselves. That’s the way this country works’”. 

In truth, even if Ren’s offer was to mollify White House rancour, the proposition is plagued with uncertainty. Embroiled in a bitter dispute with the Americans, would Beijing – whose influence over Huawei is critical – allow core parts of the company to be peddled in the West? And who would even want to buy into the 5G market, dominated as it is by low-cost Huawei? (On that, Ren admits he was “no idea”.)

But there is nonetheless merit to the proposal. With many in Europe willing to do business with Huawei in spite of US obstinacy, the world risks being riven by a new ‘Berlin cyber-Wall’. Fears of a technological cold war shouldn’t spurn an appropriate wariness of Huawei, but its offer deserves a fair hearing.

L'articolo Huawei’s Unprecedented Offer To End US Ban proviene da InsideOver.