There has been a lot going on in the world lately, both bad and good. One of the good things that most people are looking forward to is the rollout of 5G wireless service. This has not been quite as fast as many people have been looking for, especially since 4G service is on the Moon, and part of that is the role that one company plays in the matter: Huawei. It has been in the news quite a bit in the past year or so and it has become quite controversial. So, what’s the deal with Huawei?

About Huawei

Huawei was founded in 1987 in Shenzhen, China. The Chinese government was attempting to modernize its economy, and in particular its telecommunications sector. It was founded by Ren Zhengfei, a former deputy director of the People’s Liberation Army. The name is derived from a slogan that he saw on a wall, zhonghua youwei which translates to China has promise. 

Zhengfei sought to reverse engineer foreign technology to replace foreign competitors. At the time all of China’s technology infrastructure was imported. It’s first major breakthrough came in 1993 creating a program controlled telephone switch and entered the mainstream market. Huawei won the contract to build the People’s Liberation Army’s first national telecommunications network after a key meeting between Zhengfei and Party general secretary Jiang Zemin.

The company has expanded since into not only a domectic-Chinese giant but also into an international giant. It has partnered with companies around the world to increase its exposure entering into network security, data storage and smartphone manufacturing. In 2019 the company reported revenue of $122 billion.

Trouble Brewing

For most people the first time that they heard of the company was when CFO Meng Wangzhou (Zhengfei’s daughter) was arrested at her home in Vancouver, British Columbia on an arrest warrant from the US. She was wanted in relation to potential violations of sanctions regarding Iran in December of 2018 relating to one of Huawei’s subsidiaries, Skycom Tech, operating in Iran. China urged Canada to release her and quickly arrested two Canadian citizens on espionage and drug charges and stopping importation of canola oil from Canada. One of those Canadians was even sentenced to death. A financial fraud charge was added to Meng’s charges in January of 2019. Her extradition hearing is today.

For many this also brought to light an increasing distrust of Huawei by many governments around the world. While private companies are allowed to exist in China, national law states that they must cooperate with the Chinese intelligence services. The company is owned by trade union committees, which places it under control of the Chinese federation of trade unions and ultimately under Chinese Communist Party control. Huawei, and many other Chinese companies, have been reverse engineering foreign technology in an attempt to modernize their country and providing a cheaper product to the huge Chinese consumer market. Foreign countries have also invested in their infrastructure to build their networks. 

Trade Wars

As part of his trade war with China US President Donald Trump essentially blacklisted the company banning it from the US by executive order. It was believed that Huawei was using its technology to gather data and spy on anyone using their networks increasing the likelihood of cyber attacks. There is also fear that in the event of an attack the Chinese government could order Huawei to shut off the equipment of anyone using it potentially crippling their infrastructure.

In May 2019 the US Department of Commerce added Huawei and 68 of its foreign subsidiaries and affiliates to a list restricting US companies from doing business with them without a government license. This stems from the reason that Meng Wengzhou was arrested as well, that is “knowingly and willfully causing the export, re-export, sale and supply, directly and indirectly, of goods, technology and services (banking and other financial services) from the United States to Iran and the government of Iran without obtaining a license from the Department of Treasury’s Office of Foreign Assets Control (OFAC)” 

Foreign Bans

Most US companies immediately put their business with Huawei on hold and many foreign businesses did the same. The British company ARM Holdings were ordered to stop collaborating with Huawei depriving it of their chips and ARM a huge chunk of revenue. To further exacerbate the issue for ARM, they feel that this will only encourage China to expand its own semiconductor industry. At the same time two of Europe’s largest telecom giants Vodafone and EE dropped Huawei’s 5G handsets leading consumers in Europe purchased from competitors like Samsung. 

International organizations also suspended Huawei, like the SD Association, the Wi-Fi Alliance and JEDEC, though most of these were temporary to assess the US government’s ban and they have resumed relationships with the company. 

Several other countries also banned the use of Huawei equipment like Australia, New Zealand and Japan while others like the UK, France and Germany have placed tighter restrictions of the company.

Huawei Is A Threat

The belief that Huawei presents a threat is more than just mere statements. The US government has been conducting electronic surveillance on it and a FISA warrant was obtained for further investigation. Skycom was found to have been used to get embargoed US goods and technology to Iran and to move money into and out of the country. US authorities received this information by tracing Huawei executives electronic devices as they traveled through airports thanks to the FISA warrant.

But is Huawei a security threat? Hauwei of course says it isn’t (to no one’s surprise) and has filed a lawsuit in US court seeking an overturn of Trump’s executive order blacklisting them. Little evidence has been found that establishes that their equipment is being used for espionage or sabotage but the company, as a Chinese-owned company, has a singular goal to undermine foreign competition and steal trade secrets and intellectual property. This end goal is sanctioned by the Chinese government and the world must be wary of companies like Huawei or other Chinese telecoms like ZTE. 

Reforming China

There is little doubt that Chinese companies have stolen foreign trade secrets and intellectual property. That has allowed the country to modernize into a global power almost overnight. The Chinese government has proven that it cannot be trusted in any endeavor that it is a part of if it does not benefit them. As US Senator Mark Warner (D-VA) put it “This is not about finding ‘backdoors’ in current Huawei products — that’s a fool’s errand. Software reviews of existing Huawei products are not sufficient to preclude the possibility of a vendor pushing a malicious update that enables surveillance in the future. Any supposedly safe Chinese product is one firmware update away from being an insecure Chinese product.

So, is this simply political posturing? Sure. Does Huawei present a serious national security threat? Potentially yes. Is this an attempt to allow a commercial rival from an allied country like Samsung to gain ground over overtake Huawei? This could be an unintended consequence. At the very least China and Chinese companies have not been playing by the rules and that needs to change. As China becomes a global power it is inevitable that their companies will produce more goods that will find their way into other countries. But cheaply made Chinese goods may lead to more problems than they are worth.

Considering many of the restrictions on the company have been lifted when a trade deal between the US and China seems likely or is agreed to it does seem political. But China has been guilty of bad behavior and this seems like it is the only way to force them into change. As we expand into 5G services it will come in detriment to ourselves as Huawei is a global leader in 5G. As far as security goes, risks will always be present, no matter who makes the equipment or develops the software.

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