This month’s US commerce department ban on US equipment and software companies supplying Huawei is a further blow to the global leader in 5G technology and second-biggest smartphone maker in the world. At the same time, however, it reinforces the notion that the anti-Huawei action is not about fear of China spying on US interests, but rather about fear of competition.
The new rule requires any foreign chipmakers producing chips from Huawei designs to get a licence to use US design tools or equipment in the process. In other words, even independent manufacturers must get permission to use US technology. Ironically, the biggest victim of this rule is likely to be one of the economic mainstays of pro-American Taiwan.
The world's biggest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC), depends on Huawei for 15%-20% of its revenue. Nikkei Asian Review reports that TSMC is about to build a $12bn advanced chip facility in Arizona in the US, and is also a major supplier to Apple. The collateral damage of the series of US bans extends beyond its own borders. It has also strong-armed the UK government into banning Huawei, resulting in a decision in January to require mobile network operators to remove Huawei equipment from the core of their infrastructure.
However, news emerged this week that UK cabinet ministers are watering down the requirement, and plan only to prevent operators purchasing equipment from Huawei from 2023. This not only stops short of dismantling Huawei equipment, but allows the company time to roll out its 5G infrastructure fully across the UK over the next three years.
One of the reasons for the UK’s soft-core approach to Huawei is that it does not wish to damage its own enterprises: significant investment has already gone into Huawei 5G equipment by the likes of BT, and most networks have Huawei’s 4G infrastructure at their cores.
The further irony, however, is that the Huawei ban may have the exact opposite effect of the ostensible aim of securing Western networks. The UK’s National Cyber Security Centre has been asked to investigate the effect of the US trade restriction on the safety of Huawei’s network. According to the New Statesman, some fear that the company may be forced to turn to less secure, non-US component suppliers.
This piles irony on top of irony: there is no evidence that Huawei’s 5G infrastructure is compromised, or that the Chinese government has required it to include a “backdoor” that will allow monitoring of traffic on foreign networks, as the US government has claimed. The real motive can be traced across numerous statements made by US leaders regarding the threat of Chinese competition.
US secretary of state Mike Pompeo said earlier in May that the TSMC investment in Arizona "bolsters the US national security at a time when China is trying to dominate cutting-edge tech and control critical industries".
US attorney-general William Barr told the China Initiative Conference in February: “Within the next five years, 5G global territory and application dominance will be determined. The question is whether, within this window, the US and our allies can mount sufficient competition to Huawei to retain and capture enough market share to sustain the kind of long-term and robust competitive position necessary to avoid surrendering dominance to China. The time is very short, and we and our allies have to act quickly.”
These statements provide the context in which Huawei is being banned in the US, and in which Donald Trump is pressuring his country’s allies to block Huawei’s expansion. It is about fear of market dominance, rather than fear of market eavesdropping.
• Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za.
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