Are the tides turning against Chinese tech companies?

  • Jul 07, 2020 AEST
  • Team Kalkine
Are the tides turning against Chinese tech companies?

Summary

  • Many economies such as the US, UK, India, Canada, are now singing the same tune and turning the tide against Chinese vendors by excluding them or at least taking them out from their core 5G network.
  • The U.S. FCC deems Huawei and ZTE as a national security threat and had cut funds worth US$8.5 billion for the US carriers purchasing and servicing from the two Chinese vendors.
  • As per FCC, both the vendors have close ties with the Chinese Communist Party and military. Further, Chinese law is noted to allow the government to access companies’ data, which could be used for espionage activity by China.
  • The US government unveiled further restrictions on the development of Huawei’s chip using the US software and technology; aimed at impacting semiconductor manufacturing.

During pre-coronavirus period, it was no big deal to have products manufactured in different countries. However, at present, almost every economy worldwide is heading towards being self-reliant and having domestic vendors.

Owing to the outbreak of COVID-19, nations are likely to reduce their dependence upon China. Moreover, Australia pressed for an independent international inquiry over the origin of COVID-19 and the way it was handled by China.

In its response, China, the biggest importer of Australia, levied 80 percent tariff on Australian barley imports and prohibited the import of beef from 4 slaughterhouses of Australia. Moreover, China has advised its natives and students against travelling to Australia on possibilities of facing racist attacks.

Previously, in 2018, Australia had restricted Huawei from building its national broadband network (nbn) and  providing 5G technology to the nation. 

The move caused the relationship between the two nations turn sour.

Did you Read; Australia-China Escalating Tensions Upsurge- Grim Times Ahead?


Let us now look at various nations that are following this trail of strained relationship with China.

The US has turned its back against Chinese vendors.

Data privacy, guidelines, standards are one of the most talked about topics in tech.

In the light of above statement, the U.S. Federal Communications Commission (FCC) is assigned with safeguarding the American communication infrastructure from multiple security threats. 

5G technology is currently the trending topic of discussion, as it is more commonly available nowadays. But there are numerous questions raised concerning its privacy.

Furthermore, consumers are also demanding a higher level of protection as they are becoming more aware and cautious of how corporations are scrutinising and keeping a track of them.

Taking this into account, recently, FCC officially designated China-based vendors, Huawei and ZTE as a threat to national security and its 5G future. As a result, the US carriers would not be able to utilise FCC’s Universal Service Fund (USF) worth US$8.3 billion to buy, obtain, improve, modify products or services from these 2 Chinese vendors.

As per Ajit Pai, Chairman of the U.S. FCC, the key move to label Huawei and ZTE as national security threats was undertaken after consideration of the enormous weight of evidence.

This decision was justified with the explanation that both the vendors have close ties with the Chinese Communist Party and China’s military. 

Moreover, considering the fact that Chinese law obligates both the companies to cooperate with Chinese intelligent services; allowing the government to access companies data.

Despite the fact that there has not been a substantial proof that both the organisations are officially working with the Chinese government to spy on Americans, yet both the vendors have connections with China. The U.S. FCC argues their equipment has noticeable security flaws and could be used by China for cyber espionage on individuals, corporations, and government agencies.

In Mid-May, the US Bureau of Industry and Security (BIS) announced new export control rules aimed at restricting Huawei’s chip development efforts using certain US software and technology.

Under the new rule, non-US manufacturers would have to obtain a license to use the US chipmaking equipment before being able to sell semiconductors to Huawei.

With the outbreak of COVID-19 in China, relationship between the US and China have further deteriorated. However, the latest moves by the US to cut off the giant Chinese vendors have only added fuel to this tech war.

Did you read; 5G Makes Fast Inroads, Are We Ready Yet?

Recently, India banned the usage of 59 Chinese apps, and the country’s 5G network is likely to emerge with non-Chinese players.

Huawei had been a main equipment provider to Indian telecom operators (Vodafone Idea and Bharti Airtel) at the time of early launch of the 4G services in the nation.

In late December 2019, the vendor had some reprieve when the Government of India gave all the players, including Huawei a nod to participate in 5G trials in the country.

However, a lot has changed since then.

Amid tensions with China in the wake of clashes on their border disagreements, India was banned 59 Chinese apps such as TikTok, WeChat, CamScanner and many more in the nation as these apps were engaged in activities, which were threatening the national security of India.

Abiding by the ban, the Department of Telecommunications had advised telecom operators and ISPs to immediately block access to the apps.

Of late, the Department of Telecommunications also noted the revision of 4G tenders issued by public telecom operators, BSNL and MTNL to prevent the participation of global vendors such as Huawei and ZTE.

In the light of the above statement, India might lock out ZTE and Huawei from Indian markets completely going forth, and 5G network might emerge in the country with non-Chinese players.

The UK is likely to cut off the relationship with the giant Chinese vendor Huawei and would bar the vendor from their 5G network.

Earlier this year, Britain's security services signalled go ahead for the usage of Huawei components in building 5G infrastructure.

However, post US banning Huawei from utilising any American (IP or intellectual property), the UK’s national cybersecurity centre suggested the complete prohibition of Huawei and scrape its technology from current potions of the network service.

UK PM, Boris Johnson expects to draw up plans to strip out the usage of Huawei in Britain’s 5G infrastructure in 2020 over security concerns.

Numerous proposals are being drawn up by various officials to stop the installation of Huawei’s equipment in the 5G network.

It looks like the UK is taking a U-turn and would be switching over its attention to non-Chinese companies.

Did you read: Is 2020 the year for 5G amid COVID-19?

Lately, Canada welcomed Scandinavian companies Nokia and Ericsson to build 5G network infrastructure, and effectively locking Huawei out.

The three major Canadian telecommunications operators BCE, Telus, Rogers, have decided to use 5G equipment from Nokia and Ericsson.

Previously Bell and Telus planned to establish their 5G network with Huawei. However, after recent developments surrounding Huawei’s CFO Meng Wangzhou’s arrest and possible extradition to the US, the two operators ditched Huawei and picked Nokia and Ericsson to build their 5G infrastructure.

In January 2020, Rogers (Canadian network operator) had already collaborated and launched its 5G network with Ericsson across Toronto, Ottawa, Montreal, and Vancouver.

It looks like Huawei is in big trouble amid phase-out from 5G network infrastructure across the globe.

 


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