Until a few weeks ago, the average person would have barely heard about Huawei, but suddenly, this Chinese tech giant is global news and is at the centre of a geopolitical row. WHY? And what does this mean for the global rollout of 5G networks? I will explain.
Top U.S companies cut off vital Huawei supplies
On the 15th of May 2019, US President Donald Trump blacklisted Chinese tech giant Huawei, barring US firms from using their telecoms equipment such as smart phones and networking gear, saying that Huawei posed a “risk to national security” and could be a Trojan Horse for Chinese espionage.
Following this announcement, a wave of American tech companies including Google, Intel, Corning, and ARM and Qualcomm off Huawei’s access to vital hardware and software services, plunging Huawei into a unprecedented crisis. Huawei suddenly became an emblem of fears about China, with many U.S concerns technically tied to not what Huawei has done, but more around what it may do.
Troubles ahead of a new digital era
This is not just a US – China issue: blocking Huawei’s access to critical components could have many global implications, including disrupting the rollout of critical 5G wireless networks worldwide.
So we’ve all heard that 5G is coming and you may be thinking, “So what? Isn’t this just another incremental change that forces us to get a new phone to enjoy the faster speeds?” No. No, it isn’t.
No only are 5G networks up to 100 times faster than 4G, have massive device connectivity, and immediate and uninterrupted ultra-low latency communication (meaning you will be able to download entire movies to your phone in a matter of seconds – awesome!), but 5G will grease the wheels of many Forth Industrial Revolution key technologies, such as IoT, smart cities, telesurgery, and virtual reality. This is huge. Economically, 5G could generate $12.3 trillion in economic outputs and support 22 million jobs by 2035.
However, experts say 5G is more susceptible to hacking than previous networks. And as whole industries become reliant on wireless connectivity, they become exposed to cyber threats; a remote sabotage of medical devices or mass automotive cyber-attack could turn soon into a dangerous reality.
In a quest for 5G global domination, China was aiming for a commercial launch in 2020. Spearheaded by Huawei, after a $400 billion investment they were predicted to become the largest 5G market with 430 million users in 2025. A big player, Huawei had surpassed corporate giant Apple to become the second largest smart phone seller. They were set to overtake Samsung’s market share by 2020, and provide the technology for 5G wireless infrastructure all across the world.
Is this the start of a technological war?
The Huawei ban counters Trump’s declaration this year that “America must win the race to ensure national competitiveness” and to “improve American’s lives.” As ‘national security’ became a catch phrase, an initial analysis following enforcement of the order suggested that Huawei’s $11 billion U.S. supply chain would be hit. Temporary arrangements by the Commerce Department were announced to “prevent interruption” but any relaxation would be temporary, forcing Huawei to create their own vital chips and products.
And the stakes are high for all sides.
“Lose-lose,” tweeted Huawei, "Washington’s decision to force U.S. companies to stop doing business with tech giant Huawei creates losers on both sides."
“Isn’t it ironic?” they tweeted on to say, “The U.S. is resorting to the same measures of restrictive state controls and trade barriers that it accuses China of using in their trade war."
The US move has split many European allies, claimed the SCMP, "with Britain’s foreign intelligence chief unconvinced of the need for an outright ban, Italy’s intelligence service reportedly having no security concerns, and a German minister saying any restrictions cannot target specific companies."
Huawei was even more direct about it. "Deflated," they tweeted of the international response, "The U.S. plan to isolate Huawei on the world stage is going down like a lead balloon."
Google searches for 5G and Huawei are at an all-time high. And as we watch how this geopolitical tech war unfolds and the future implications that it will create, there is one thing that is for certain: this was a powerful card that the U.S held in its hand, and now it has been played.