Huawei Plans £1 Bn Chip Facility in Cambridgeshire, US Objects

Summary

  • Huawei ready to press ahead with its expansion plans in the United Kingdom despite the US objection on the company’s 5G technology platform
  • US says it should not threaten national security and privacy

Huawei Technology Corporation Limited of China has recently announced plans to make a big ticket investment in the United Kingdom. The company plans to make semiconductor chips for optoelectronics for the broadband internet industry in the country which would increase the speed of data flow over fiber optic networks. The investment in facility and equipment is expected to be around £1 billion, and the plant will be located at Cambridgeshire in the east of England near the village of Sawston. The company insists that that this investment is crucial for the United Kingdom which is currently looking to increase investments in hi-tech industries in the country and also to spur training and employment of high-skilled people. The country is however, in a fix as it has been receiving disapproval from the United States against the use of Huawei equipment in the country. The National Cyber Security Centre (NCSC) had initiated a review of the company’s equipment’s last month in response to the US assertions and its findings are yet to come out. In case the Huawei investment in Britain goes through without facing any hurdles, it will mark a major foray of the company in the European continent which it might later leverage to circumvent the sanctions imposed on it by the United States of America. However, as of now the company has categorically stated that this investment is in no way connected to the 5G communications equipment’s on which the US in particularly concerned, and hence should not face any resistance from British authorities.

A brief background of the Huawei controversy with the US

Huawei has been embroiled in a massive controversy with the Unites States for a couple of years now. The American establishment believes that the telecommunication equipment manufactured by Huawei have a built in security system, which can enable the Chinese intelligence to spy upon other countries. It has advised many of its ally countries not to use equipment built by the company and to restrict the company’s activities in their homeland. Four countries including the US, Canada, Australia, and New Zealand have already declared that the telecommunication equipment made by Huawei pose a huge national security threat. On the other hand, Britain and Germany have not found anything suspicious yet, after undertaking due diligence of Huawei’s hardware and software. The debate however is still continuing and is unlikely to die down soon, and America’s vociferous opposition to the Chinese company continues. Incidentally, Huawei has expanded its operations rapidly over the past decade and has established itself as one of the largest telecommunication equipment manufacturers in the world. The company had clocked a global revenue of $112 billion IN 2019.

The British government has not taken a clear stand on the security concerns posed by Huawei’s equipment, whereas the review by National Cyber Security Centre (NCSC) has not revealed anything of concern so far. There are multiple considerations that the country has to keep in mind before it finally decides to stand for or against Huawei. On the one hand, there is this intense persuasion by the United States to shun Huawei equipment’s and on the other it is the massive investment opportunity that is coming the country’s way, along with hundreds of high tech jobs. The most critical concern, however, is that no international consensus has yet been arrived over this matter, which could definitely speed up its decision.

In recent months, the British government has embarked upon a drive to sign many bilateral trade deals. The country badly needs them to rebuild itself after parting ways with the European Union and with the advent of the coronavirus pandemic. It will find itself in a very difficult position if the US decides to make Huawei an irritant in the ongoing trade negotiations with itself. Since other major countries like Australia and New Zealand have opposed Huawei, it is likely they may also bring it up in their trade negotiations with Britain. On the other hand it will be against the spirit of a fair treatment for all, if the country would ban Huawei equipment’s and investments in the country without any concrete evidence supporting such a move. In either case, the country would have to perform a tight rope walk balancing between the two while ensuring its best interests.

Conclusion

There will be two important factors however which would be on top of the British decisionmakers’ minds. First, the competitive advantage the investment will bring into the United Kingdom. The Boris Johnson government has identified internet connectivity as a major component in the development of the country and in the past few months launched a major drive to spread optical fibre connectivity across the United Kingdom. In this regard, the technology being brought in by Huawei will bring benefits worth several billions of pounds over many years, leave alone the hundreds of high tech jobs it will create in the country. On the other hand, the immediate and long-term benefit of the bilateral trade deals for the country is of paramount importance. These trade deals will not only help the United Kingdom come out strong from the current economic crisis but will also make its international trade position strong. The benefits of these trade negotiations will accrue to the country over many years to come and will give a major boost to the country’s competitive advantage.

Summing up, the ideal case scenario for the United Kingdom will be that it is able to keep both, as there is no sensible reason trading one for the other. Its negotiators would have to be very tactful with their skills while speaking to either United States or other countries so as to not to let Huawei become a sore point. In the meantime, the Local council of Swanton has already approved of the project with a one against a nine vote in favor of the company.


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