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Remember Huawei’s stunning victory over U.S. President Trump in late January? After months of lobbying, America’s key security ally, the U.K., elected to choose Shenzhen over Washington. Trump was apoplectic with fury, Boris Johnson’s U.K. government was accused of betrayal. Well, it turns out that the happy ending celebrated by Huawei’s management at the time may have been premature.
Late on March 6 came the news that the U.K. Defence Committee is to launch an inquiry into 5G security, for which you can read an inquiry into the decision to allow Huawei into the U.K.’s next-generation network. Tobias Ellwood, the committee’s chairperson said “we will work to understand the legitimate concerns around the decision to allow Huawei to contribute to the 5G network in the U.K.,” adding that “we will not shy away from tackling the public’s concerns head on.”
With smartphone sales in the balance, a setback in 5G sales in the U.K., especially given the potential to impact other markets, is the last thing the company needs. You can tell there is concern that a revisit of the U.K. decision might be on the cards by Huawei’s response to the latest news. “Over the last 18 months,” the company said in a statement, “the [U.K.] government and two parliamentary committees have conducted detailed assessments of the facts and concluded there is no reason to ban Huawei from supplying 5G equipment on cybersecurity grounds.”
Washington’s immediate public response to the U.K. decision in January appeared muted—but, behind closed doors, it was the very opposite. Advisers reported that one telephone call between the leaders descended into an angry tirade. But, even so, Trump’s decision to keep an itchy Twitter finger under control was seen as a positive sign that damage to the security alliance might not suffer too badly.
But for the more hawkish politicians in Washington, there has been no such pause. And in the latest move, Republican Senators Marco Rubio (R-FL), Tom Cotton (R-AR), Ted Cruz (R-TX) and Josh Hawley (R-MO) have penned the Protecting America from Foreign Investors Compromised by the CCP Act, which seeks to threaten the U.K.’s “whitelist” insider status as regards investment in the U.S.
Such a move would damage the integrated nature of the U.K. and U.S. industrial defense and security alliance that sees companies work seamlessly cross-border.
As Rubio explained in a statement, “the U.K.’s recent misguided decision to allow Chinese telecommunications equipment into their 5G infrastructure puts the security and economic interests of the U.S. and our allies at risk. The U.S. must now reevaluate how we engage with our important ally.”
Cruz went further, calling Huawei “a global espionage operation masquerading as a telecom company,” and warning that “Britain is putting the national security of the U.S. and our allies in jeopardy by allowing Huawei to build its 5G infrastructure... This legislation will help protect the U.S. against the dangers posed by deals such as the one our British allies are pursuing.”
And that sentiment is now fairly widespread across U.S. lawmakers—enough that there could be some unexpected consequences on the U.K. that have been thought unlikely until now. On March 3, 20 cross-party U.S. senators wrote to the U.K. parliament, expressing “significant concerns” and urging the decision is “revisited.”
This is a campaign to force the U.K. to change its mind. And while the U.S. pressure is heating up, the real pressure on the U.K. government to change course is coming from closer to home. The U.K.’s hawkish politicians had lobbied furiously for a ban on Huawei prior to the government decision, and they have not toned down their lobbying or their rhetoric since it was made in late-January.
“We have been operating in Britain for nearly 20 years,” Huawei said in its statement, “and played a vital role in the development and delivery of 3G and 4G for people across the U.K. Cybersecurity requires high and common standards across the telecoms industry, which Huawei has always supported. Creating a 5G Britain rightly requires scrutiny and we will work with the Select Committee to address their questions in the coming months.”
“This makes no logical sense,” former party leader Sir Iain Duncan-Smith wrote in a column on February 9. “It is inconceivable that such a decision should be made in the face of all the evidence of the threat that China poses to us and our allies.”
This week, a meeting of U.K. parliamentarians debated the issue and their options. With the decision made, the consensus among that growing group of politicians is that the agreed cap on Huawei equipment, now 35%, should be reduced to 0% in the next few years, meaning no Huawei kit in the U.K.’s 5G network.
“We have infuriated the Americans and our other allies in the Five Eyes,” Tory MP Owen Paterson warned the meeting. “Should we not have a concerted programme now with the Five Eyes allies to get to 0% over a short period of time?
This will come to a head next week, on Tuesday (March 10), when those Tory MPs seek to force a law through parliament to amend the U.K. government decision. The cut-off they ask for will be 2022, a move to appease the U.S. but give U.K. networks time to plan, they say, without impacting too heavily on 5G deployment plans.
As reported by the Financial Times, the amendment would bar networks from using “equipment supplied by companies deemed to be ‘high risk vendors’ by the National Cyber Security Centre” after that date, but may well be “onerous for operators—the U.K.’s four mobile networks have all launched 5G services using Huawei kit.”
The hope for Huawei is that the group cannot summon enough votes to force the government’s hand. According to the FT, one of the group claimed “as many as 40 Conservatives could back them—sufficient to inflict a defeat on the government... Another predicted up to 60 Tory MPs could support the amendment... But one prominent rebel said the number was currently nearer 20.”
The stakes are high, and given the angry U.S. response and a groundswell on the Tory back-benches for a revision, a cut-off date might be the most graceful exit for the government. As John Hemmings from the Henry Jackson Society warned in a column on March 4, the U.K. sticking to its decision on Huawei’s 5G inclusion risks grave consequences. “The Five Eyes partners are not about to stop working together—but such a deep and special partnership will not last unless all its members trust that they are working for the same ends.”
If the U.K. is forced to backtrack, that will be a hugely damaging blow to Huawei, which had lauded the example of the U.K. as vindication of its security position. The U.K. is seen as a litmus test for many other nations, given its expertise on cyber and its long-term use of Huawei. The country also has the most extensive setup for evaluating Huawei security risks anywhere in the world.
And to add to this worry, the Information reported on March 6 that the Chinese tech giant is now projecting “a big drop in smartphone sales amid U.S. sanctions—in what would be its first year-on-year decline.” The leaked numbers are material, up to a 20% decline, and that could get worse as the impact of coronavirus takes hold. According to the report, this decline, reversing a decade of uninterrupted growth, “stems from expected weak sales in Europe and other overseas markets—a result of U.S. sanctions that block the company from using Google’s mobile services.”
Despite those sanctions, Huawei still posted smartphone growth in 2019, and maintained its global number two spot behind Samsung and ahead of Apple. The company initially forecast up to 300 million device shipments last year, but ended up shipping 240 million, a smaller than expected 17% uplift on 2018. A 20% decline on this would take them back down below 200 million units, below that 2018 level.
At the start of the year, Huawei chairman Eric Xu said the company was “standing strong in the face of adversity,” but admitted that this year would be harder than last, forecasting this slowing of growth but stopping short of predicting a sharp decline. “Survival will be our first priority,” Xu said, blaming the U.S.
Meanwhile, the challenge Huawei faces in convincing the world of the lack of substance in U.S. charges has taken two other blows recently. First claims that proof of sanctions abuses in Iran has come to light, and then with a subsequent admission from one of the company’s security chiefs that a company of Huawei’s size can’t be certain its equipment is not used for malicious purposes. That point is fair—no tech giant can be, but the timing of such an acknowledgement is unfortunate.
Twists and turns. Again. Huawei had hoped the worst might be behind it with the U.K.’s decision in January, the next few days, though, could be a major setback for the company and throw everything back into the mix.
https://www.forbes.com/sites/zakdof...ext-tuesday-could-be-a-disaster/#4661de02e09d
Late on March 6 came the news that the U.K. Defence Committee is to launch an inquiry into 5G security, for which you can read an inquiry into the decision to allow Huawei into the U.K.’s next-generation network. Tobias Ellwood, the committee’s chairperson said “we will work to understand the legitimate concerns around the decision to allow Huawei to contribute to the 5G network in the U.K.,” adding that “we will not shy away from tackling the public’s concerns head on.”
With smartphone sales in the balance, a setback in 5G sales in the U.K., especially given the potential to impact other markets, is the last thing the company needs. You can tell there is concern that a revisit of the U.K. decision might be on the cards by Huawei’s response to the latest news. “Over the last 18 months,” the company said in a statement, “the [U.K.] government and two parliamentary committees have conducted detailed assessments of the facts and concluded there is no reason to ban Huawei from supplying 5G equipment on cybersecurity grounds.”
Washington’s immediate public response to the U.K. decision in January appeared muted—but, behind closed doors, it was the very opposite. Advisers reported that one telephone call between the leaders descended into an angry tirade. But, even so, Trump’s decision to keep an itchy Twitter finger under control was seen as a positive sign that damage to the security alliance might not suffer too badly.
But for the more hawkish politicians in Washington, there has been no such pause. And in the latest move, Republican Senators Marco Rubio (R-FL), Tom Cotton (R-AR), Ted Cruz (R-TX) and Josh Hawley (R-MO) have penned the Protecting America from Foreign Investors Compromised by the CCP Act, which seeks to threaten the U.K.’s “whitelist” insider status as regards investment in the U.S.
Such a move would damage the integrated nature of the U.K. and U.S. industrial defense and security alliance that sees companies work seamlessly cross-border.
As Rubio explained in a statement, “the U.K.’s recent misguided decision to allow Chinese telecommunications equipment into their 5G infrastructure puts the security and economic interests of the U.S. and our allies at risk. The U.S. must now reevaluate how we engage with our important ally.”
Cruz went further, calling Huawei “a global espionage operation masquerading as a telecom company,” and warning that “Britain is putting the national security of the U.S. and our allies in jeopardy by allowing Huawei to build its 5G infrastructure... This legislation will help protect the U.S. against the dangers posed by deals such as the one our British allies are pursuing.”
And that sentiment is now fairly widespread across U.S. lawmakers—enough that there could be some unexpected consequences on the U.K. that have been thought unlikely until now. On March 3, 20 cross-party U.S. senators wrote to the U.K. parliament, expressing “significant concerns” and urging the decision is “revisited.”
This is a campaign to force the U.K. to change its mind. And while the U.S. pressure is heating up, the real pressure on the U.K. government to change course is coming from closer to home. The U.K.’s hawkish politicians had lobbied furiously for a ban on Huawei prior to the government decision, and they have not toned down their lobbying or their rhetoric since it was made in late-January.
“We have been operating in Britain for nearly 20 years,” Huawei said in its statement, “and played a vital role in the development and delivery of 3G and 4G for people across the U.K. Cybersecurity requires high and common standards across the telecoms industry, which Huawei has always supported. Creating a 5G Britain rightly requires scrutiny and we will work with the Select Committee to address their questions in the coming months.”
“This makes no logical sense,” former party leader Sir Iain Duncan-Smith wrote in a column on February 9. “It is inconceivable that such a decision should be made in the face of all the evidence of the threat that China poses to us and our allies.”
This week, a meeting of U.K. parliamentarians debated the issue and their options. With the decision made, the consensus among that growing group of politicians is that the agreed cap on Huawei equipment, now 35%, should be reduced to 0% in the next few years, meaning no Huawei kit in the U.K.’s 5G network.
“We have infuriated the Americans and our other allies in the Five Eyes,” Tory MP Owen Paterson warned the meeting. “Should we not have a concerted programme now with the Five Eyes allies to get to 0% over a short period of time?
This will come to a head next week, on Tuesday (March 10), when those Tory MPs seek to force a law through parliament to amend the U.K. government decision. The cut-off they ask for will be 2022, a move to appease the U.S. but give U.K. networks time to plan, they say, without impacting too heavily on 5G deployment plans.
As reported by the Financial Times, the amendment would bar networks from using “equipment supplied by companies deemed to be ‘high risk vendors’ by the National Cyber Security Centre” after that date, but may well be “onerous for operators—the U.K.’s four mobile networks have all launched 5G services using Huawei kit.”
The hope for Huawei is that the group cannot summon enough votes to force the government’s hand. According to the FT, one of the group claimed “as many as 40 Conservatives could back them—sufficient to inflict a defeat on the government... Another predicted up to 60 Tory MPs could support the amendment... But one prominent rebel said the number was currently nearer 20.”
The stakes are high, and given the angry U.S. response and a groundswell on the Tory back-benches for a revision, a cut-off date might be the most graceful exit for the government. As John Hemmings from the Henry Jackson Society warned in a column on March 4, the U.K. sticking to its decision on Huawei’s 5G inclusion risks grave consequences. “The Five Eyes partners are not about to stop working together—but such a deep and special partnership will not last unless all its members trust that they are working for the same ends.”
If the U.K. is forced to backtrack, that will be a hugely damaging blow to Huawei, which had lauded the example of the U.K. as vindication of its security position. The U.K. is seen as a litmus test for many other nations, given its expertise on cyber and its long-term use of Huawei. The country also has the most extensive setup for evaluating Huawei security risks anywhere in the world.
And to add to this worry, the Information reported on March 6 that the Chinese tech giant is now projecting “a big drop in smartphone sales amid U.S. sanctions—in what would be its first year-on-year decline.” The leaked numbers are material, up to a 20% decline, and that could get worse as the impact of coronavirus takes hold. According to the report, this decline, reversing a decade of uninterrupted growth, “stems from expected weak sales in Europe and other overseas markets—a result of U.S. sanctions that block the company from using Google’s mobile services.”
Despite those sanctions, Huawei still posted smartphone growth in 2019, and maintained its global number two spot behind Samsung and ahead of Apple. The company initially forecast up to 300 million device shipments last year, but ended up shipping 240 million, a smaller than expected 17% uplift on 2018. A 20% decline on this would take them back down below 200 million units, below that 2018 level.
At the start of the year, Huawei chairman Eric Xu said the company was “standing strong in the face of adversity,” but admitted that this year would be harder than last, forecasting this slowing of growth but stopping short of predicting a sharp decline. “Survival will be our first priority,” Xu said, blaming the U.S.
Meanwhile, the challenge Huawei faces in convincing the world of the lack of substance in U.S. charges has taken two other blows recently. First claims that proof of sanctions abuses in Iran has come to light, and then with a subsequent admission from one of the company’s security chiefs that a company of Huawei’s size can’t be certain its equipment is not used for malicious purposes. That point is fair—no tech giant can be, but the timing of such an acknowledgement is unfortunate.
Twists and turns. Again. Huawei had hoped the worst might be behind it with the U.K.’s decision in January, the next few days, though, could be a major setback for the company and throw everything back into the mix.
https://www.forbes.com/sites/zakdof...ext-tuesday-could-be-a-disaster/#4661de02e09d
