Advertisement
Advertisement
Huawei
Get more with myNEWS
A personalised news feed of stories that matter to you
Learn more
Huawei has plans to build a 5G equipment plant in France. Photo: Bloomberg

As nations build 5G networks, US national security fears about Huawei aren’t broadly shared, report finds

  • ‘A common security policy towards Chinese investment in digital infrastructure is unlikely’, a new study by the Overseas Development Institute says
  • Some countries are following the hardline US policy, so Huawei may have to focus on building self-sufficiency in key components such as chips
Huawei
Security concerns raised by the US about Huawei Technologies are not necessarily shared by other developed countries as the Chinese firm continues its plan to build a 5G equipment plant in France, according to a new report.

In a study released on Wednesday, the London-based think tank the Overseas Development Institute concluded that “a common security policy towards Chinese investment in digital infrastructure is unlikely”.

The study also said “growing concerns about technology dependence are prompting some wealthier developed countries to reassess engagement with China in digital infrastructure construction, but poorer developing countries appear reluctant to follow suit”.

The Shenzhen-based telecommunication giant plans to build a 200 million (US$244 million) manufacturing facility in France. The plant, which is expected to open in 2023, will make equipment for the production of wireless base stations for Huawei customers in Europe, according to a company statement.

In tech war with China, US debates steps beyond just blocking competition

Situated near France’s border with Germany, the site aims to produce 1 billion worth of mainly 5G equipment per year for the European market at a time the company faces growing criticism from the US that its mobile network equipment is a spying risk.

The firm has rejected the accusations, including claims that it was allowing the Chinese government access to its equipment to spy on voice and data traffic.

In 2019, the US Commerce Department’s Bureau of Industry and Security added Huawei to its “Entity List”, restricting the company’s access to US networks.

The bureau also limited exports of US technologies to the company and banned it from bidding on government contracts or building 5G networks in other developed countries, including Australia, Japan, New Zealand and Britain.
“Developing countries, however, are resisting the push to exclude the company from their networks,” the ODI study said.

US places China’s Huawei and 70 affiliates on trade blacklist

For instance, the Malaysian government has resisted Washington’s moves by insisting that its security standards will be applied in selecting 5G partners and has not ruled out using Huawei or other Chinese companies.

In Africa, most countries have embraced Huawei, with Kenya and South Africa already using its technology to power their 5G networks.

Despite growing pressure from the US for countries to stop using Chinese 5G technology, Huawei remains the largest telecoms equipment and technology provider in Africa.

A recent study by the CSIS Reconnecting Asia Project said that developing economies were still welcoming Huawei and identified 70 deals in 41 countries for cloud infrastructure and e-government services. It found that most of these deals (57 per cent) were in middle-income countries and over a third are in Africa.

In 2020, Huawei and ZTE also reportedly accounted for 50 to 60 per cent of wireless equipment sales in Africa and the Middle East. “It remains to be seen whether more countries will exclude Chinese companies from their 5G networks,” the ODI study said.

02:31

Which country dares to use Huawei in their 5G infrastructure?

Which country dares to use Huawei in their 5G infrastructure?
Olena Borodyna, a research officer in the ODI Global Risks and Resilience programme and a co-author of the report, said that with US President Joe Biden’s administration continuing a hardline policy on Huawei, and some other countries following suit, in the short-term the company would have to focus on building self-sufficiency in key components such as chips.

This could be critical to the company’s development after it depleted the stockpile of semiconductors it had built up, Borodyna said.

“While countries blacklisting Huawei affects sales in some geographies, developing countries will likely continue to purchase Huawei products,” she said. The company was also likely to continue focusing on China’s domestic market and prioritising other areas of business such as cloud services to drive growth, she added.

But in the long term, even if the relationship with the US and other countries that have blacklisted the company thawed, Borodyna said Huawei and other Chinese firms would want to limit their exposure to geopolitical risk through a continued drive for technological and innovation self-sufficiency.

She said continued leadership in rolling out 5G and also innovation in artificial intelligence and next-generation telecommunications technologies such as 6G would be contingent on the success of these efforts.

Biden cuts two Huawei financing arms off from US investor access

“This is also exacerbated by the United States limiting Huawei access to research and development facilities and accelerating its efforts to drive North American leadership in this space through initiatives such as the Next G Alliance,” Borodyna said.

Besides France, Huawei is implementing multibillion-dollar digital infrastructure projects across Africa and Asia. In Southeast Asia, it will spend US$23.2 million to build its third data centre in Thailand to develop a regional hub for digital technology. It will also jointly build an optical transport network, which will serve multinationals and government agencies, with the state-owned CAT Telecom Public Company.

The ODI study said there were reports that Chinese companies had exported smart-city technologies to more than 100 countries in 398 instances.

“[However] it is unclear to what extent concerns about security and data privacy are shared by developing countries, and if so whether this will deter them from cooperating with China, particularly in the absence of competitive alternatives,” it said.

South Africa’s first commercial 5G network uses equipment from Huawei. Photo: Bloomberg

The study said that even before introducing the 5G system, Huawei had expanded its market share in developing countries thanks to loans to governments and telecommunications companies from the China Development Bank, Exim Bank and the Bank of China for upgrading telecoms networks.

“In terms of 5G, competitors such as Samsung are reportedly unable to match Huawei in some of the more price-sensitive markets, likely including many developing countries,” the report said.

Alexander Brown, an analyst at the Mercator Institute for China Studies, said that with Huawei facing restrictions in some developed countries, “the Communist Party leadership in Beijing has made supply-chain reliability and core technology capabilities urgent matters of national security and central points of its latest five-year plan”.

Brown said that according to the plan, China would support frontier technologies such as next-generation artificial intelligence, quantum computing, semiconductors or neurosciences, and it had put the country’s leading technology enterprises under pressure to deliver.

This article appeared in the South China Morning Post print edition as: US fears over Huawei ‘not shared by many nations’
34