Huawei is in Trouble in the United States

  • Jul 07, 2020

It’s no secret that Huawei is in trouble because of U.S. sanctions. The Chinese tech company's access to vital American technology is at greater risk than ever before. Countries and mobile network operators worldwide question if the company will be able to deliver on its promises of a 5G network, and because of the increasing anti-China sentiment in India and elsewhere.

"The tide is turning against Huawei as citizens around the world are waking up to the danger of the Chinese Communist Party's surveillance state,” said Mike Pompeo, Secretary of State.

Carisa Nietsche, a researcher at the Center for a New American Security, a Washington think tank, said that Pompeo’s remarks are a bit early for speculation.

Countries such as the Czech Republic, Poland and Estonia are "only allowing trusted vendors in their 5G networks." Nietsche said many of those countries made up their minds last year, when they signaled they wouldn't work with Huawei. European countries with much bigger economies, such as the United Kingdom, France and Germany, do not have a total ban on Huawei.

Things are changing in Europe.

European countries and mobile carriers worry that Huawei won't have the 5G infrastructure as promised given the "massive hit to their business" from the new U.S. export controls.

This isn’t new for Huawei. they have been here before. Last year, the government barred American firms from selling tech and supplies to the Shenzhen-based company without first obtaining a license. Huawei stockpiled inventory and found alternative suppliers, and continued doing brisk business. The company's overseas smartphone sales took a hit because it was forced to release new models that weren't able to access to popular Google apps.

Even after reporting a strong finish to 2019, Huawei warned that 2020 would be "difficult."

That would prove to be all too true.

The latest U.S. sanction in May cuts much deeper than last year's ban. It applies to any global firms using American equipment to make semiconductors. The new rule restricts companies like Taiwan-based TSMC, from exporting computer chipsets and other key components to Huawei.

Without those chipsets, Huawei can't build 5G base stations and other equipment. This direct export rule puts Huawei’s 5G equipment business in grave danger. Without a change in law, there is a risk that Huawei will have to stop providing 5G materials. As expected, Huawei officials are calling the new rule discriminatory. Company officials say they also continue to “ receive customer support.”

In the UK, Prime Minister Boris Johnson is poised to begin phasing out Huawei 5G tech in Britain "as soon as this year," walking back a decision that granted Huawei a limited role in building that network.

The United States has long viewed Huawei warily, suspicious of how closely the company is tied to the Chinese Communist Party. The company maintains that it is a private firm owned by thousands of its employees. Critics also say Beijing could force Huawei to spy on other nations. Huawei says that has never happened and if it did, the company would refuse such orders.

Yet even as it claims independence from Beijing, Huawei has been caught up in sparring between China and the United States, and to an increasing degree, the European Union and countries such as India that are growing more wary of China.

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