Technology May 19

Huawei draws line in the sand amid US-China tensions

Execs say, it's not about cybersecurity, it's about the US leveraging tech power to crush opponents

by Nadeem Xu and Dave Makichuk
Huawei draws line in the sand amid US-China tensions
Huawei warns additional US action will harm more than just Chinese interests.

(ATF) Huawei Technologies warned the US risks opening a “pandora’s box” along with Chinese retaliation if it chooses to go ahead with additional restrictions on the tech giant.

Huawei categorically opposes the amendments made by the to the US government, which will block the Chinese tech giant and its suppliers from using US technologies to design and manufacture semiconductors.

According to a Bloomberg report, the firm warned that the latest US curbs will inflict a “terrible price” on the global technology industry, inflaming tensions between Washington and Beijing while harming American interests in the long run.

The planned US action means companies like Taiwan Semiconductor Manufacturing and its rivals will have to cut off the Chinese company unless they get waivers — virtually severing Huawei’s access to cutting-edge silicon.

Company spokesman Joe Kelly told a media briefing in Shenzhen that the US is intentionally leveraging its tech strength to crush outside firms.

“This will only serve to undermine the trust international companies place in US technology and supply chains,” Kelly said. “Ultimately, this will harm US interests.”

Huawei earlier said it will do everything in its power to find a solution. 

"The US government added Huawei to the Entity List on May 16, 2019 without justification,” it said in a statement on Monday. "Since that time, and despite the fact that a number of key industrial and technological elements were made unavailable to us, we have remained committed to complying with all US government rules and regulations. At the same time, we have fulfilled our contractual obligations to customers and suppliers, and have survived and forged ahead against all odds."

According to the company, this new rule will have an impact on the expansion, maintenance, and continuous operations of networks worth hundreds of billions of dollars that Huawei has rolled out in more than 170 countries.

Chinese retaliation

China and Huawei have threatened retaliation but Rotating Chairman Guo Ping on Monday refrained from commenting on a possible Beijing response — a departure from just two months ago when the company warned Washington risked opening a “pandora’s box,” Bloomberg reported.

“Our business will significantly be impacted,” Guo said at the briefing. 

“Given the changes in the industry over the past year, it dawned on us more clearly that fragmented standards and supply chains benefit no one. If further fragmentation were to take place, the whole industry would pay a terrible price.”

Huawei is still assessing the fallout of the latest restrictions and couldn’t predict the impact on revenue for now, Guo said. On Monday, several suppliers from TSMC to AAC Technologies Holdings plunged in Asian trading, Bloomberg reported.

Guo was far less vocal than colleague Richard Yu, who runs the consumer division responsible for smartphones. The outspoken exec said the restrictions that ostensibly aim to allay US cybersecurity concerns are really designed to safeguard American tech dominance, Bloomberg reported.

“The so-called cybersecurity reasons are merely an excuse,” Yu, head of the Chinese tech giant’s consumer electronics unit, wrote in his WeChat account. “The key is the threat to the technology hegemony of the US,” posed by Huawei, he claimed.

Yu also posted a link to a Chinese article circulating on social media with part of its headline asking: “Why Does America Want to Kill Huawei?”

Intelligence alliance

As part of the Five Eyes intelligence alliance, the US, Australia and New Zealand have already blocked the Chinese firm on cybersecurity concerns, while Canada’s Trudeau government has yet to reveal where it stands.

The UK’s decision to allow Huawei limited access to 5G networks is also hanging on a thread after Prime Minister Boris Johnson threatened to pull the plug on the heels of an intelligence report alleging China continually lied about Covid-19.

The issue has worsened already strained relations following the shocking arrest of Huawei’s CFO, Meng Wanzhou — the daughter of Huawei founder Ren Zhengfei — in Vancouver, at the request of US officials.

While the arrest is not a popular decision in Canada, she is currently the subject of an extradition hearing and is wanted by the US on fraud charges that she misled banks about the company’s business dealings in Iran. 

Many believe Meng wouldn’t get a fair trial in the US, which seems hell-bent on making an example of the Chinese executive.