US urges Europe to exclude Huawei from 5G networks. In China, there is no rule of law, no independent judiciary, therefore the Chinese Communist Party can command a vendor like Huawei
British Prime Minister Boris Johnson is under pressure to cancel the deal with Chinese firm Huawei as America toughens its stance on Huawei. More European countries are commissioning Huawei by relying on British decision undermining the US influence.
A senior US diplomat said that European nations and telecom operators should exclude Chinese tech giant Huawei from any involvement in the development of 5G networks.
“That 5G toolbox for the European Union (EU) says that a high-risk vendor should not be providing critical or sensitive components to these networks,” Robert Strayer, the US State Department’s Deputy Assistant Secretary for Cyber and International Communications and Information Policy, said at a forum in Madrid.
The EU guidance, he added, likewise says that “what had traditionally been viewed as the edge, the periphery, of the network will now have very important computing functions”, reports Efe news
“Even the edges of the network, where there’s computing going on, are going to be highly sensitive and those parts should not be provided by high-risk vendors,” Strayer said, noting that the EU established three criteria for identifying a high-risk vendor.
The most important criteria, according to the US official, is that “the vendor not be headquartered in a country where there are no democratic checks and balances.”
“In China, there is no rule of law, no independent judiciary, therefore the Chinese Communist Party can command a vendor like Huawei or ZTE to take actions that are not in the interests of Spanish citizens or of citizens around the world,” Strayer said.
UK Decision on Huawei
Early reports say that the US remained disappointed with the UK decision to allow “an untrusted vendor” into the UK market.
The UK’s national security council (NSC), a meeting of senior ministers, intelligence figures and service chiefs chaired by Johnson, approved that Huawei could supply 5G equipment, but that it would be subject to what Foreign Secretary Dominic Raab said was “one of the strongest regimes for telecoms security in the world”.
The company’s share of the British market will be capped at 35% for each of Britain’s four mobile phone operators, and it will be banned from core parts of the telecoms network and from sensitive sites, including nuclear and military facilities.
Huawei was formally deemed a “high risk vendor” because its Chinese ownership meant Beijing could in theory force it to carry out surveillance of British citizens in the future.
There is no evidence of deliberate security flaws in the company’s equipment but an official British assessment said: “The Chinese state (and associated actors) have carried out and will continue to carry out cyber-attacks against the UK and our interests.”
Spain was the last stop on a tour of Europe that earlier took the deputy assistant secretary to the Munich Security Conference in Germany and to Portugal. In Madrid, he met senior officials in the foreign and economy ministries as well as with telecom executives.
Strayer cited Ericsson, Nokia and Samsung as companies that the US government views as “secure and trusted vendors … on the same par of technology with Huawei.”
“In the US, we are using those three vendors currently to deploy 5G in dozens of American cities,” he said, insisting that “in no sense does the world need Huawei to be able to receive the best” 5G technology.
“It is the Chinese Communist Party as well as Huawei propagating this story, through millions of dollars of advocacy around Europe, that they are leading in this race. We need to demysticize 5G technology,” the US official said.
Several European telecom giants, including Spain’s Telefonica and UK-based multinational Vodafone, have announced plans to phase-out the use of Huawei components in the cores of their 5G networks in the interest of diversifying their supplier bases.
“It’s fundamental to this discussion to recognize that it should not be telecom operators making these important national security decisions for the public. It should be the governments themselves and the governments should push that stance that they want to have trusted vendors in their 5G network,” Strayer said.
Without raising the possibility of reprisals if Spain were to accept Huawei involvement in its 5G networks, the State Department official said that “if countries adopt untrusted technology in their 5G networks, that will jeopardize our ability to share information at the highest level.”
Strayer said that under Chinese law, “all entities must follow the mandates of the security and intelligence services” and are required to keep their cooperation with authorities secret.
Global 5G market
Driven by Huawei, China remained the largest contributor to the global 5G market, capturing 46 per cent of the total 5G devices sell-through in 2019, a new report said.
While Samsung led the global 5G sales with over 40 per cent of the market share, Huawei (including Honor) alone captured 74 per cent of 5G sales in China.
“However, the high dependence of Huawei on the Chinese market makes it most vulnerable to the effects of the COVID-19 outbreak on the smartphone market,” according to the latest research from Counterpoint’s ‘Market Pulse Service.’
The China smartphone market sell-through declined 8 per cent (YoY) in 2019 – the decline was steeper than the global smartphone market sell-through, which reduced 3 per cent (YoY).
“China handles at least 50 per cent of global smartphone production and the coronavirus outbreak is bound to adversely affect China as well as the global smartphone market,” said Varun Mishra, Research Analyst at Counterpoint.
There will be disruption from the supply-side with production facilities of smartphones and components either shut down or running below full capacity due to labour shortages.
“The overall demand will also dramatically fall due to disruption in retail. Offline stores will be affected the most. We are estimating sales to drop over 20 per cent in China in Q1 2020,” Mishra added.
The OEMs which will be affected the most are the ones having production facilities in the Wuhan area like Lenovo and Motorola, and the ones for whom China is the major market like Huawei.
OEMs like Realme, Honor, and Xiaomi, which are more reliant on online distribution are likely to be least affected compared to those that have a relatively high share of offline sales, said Mishra.
While all the major OEMs declined – OPPO (down by 12 per cent YoY), Vivo (6 per cent YoY), Xiaomi (22 per cent YoY), Apple (26 per cent YoY), Huawei (including Honor) grew 28 per cent for the full year, capturing over one-third of the largest smartphone market in the world.
Huawei has been aggressive in China after the US trade ban, which has led to this growth.