The Trump administration’s latest move to ban Huawei from acquiring components from American firms without government approval could slow down the global roll-out of 5G networks, said experts.
Huawei has been the leading vendor in supplying 5G network equipment, having secured 40 global contracts. It is trailed by Nokia, which has secured 37 global contracts for its 5G network equipment, and Ericsson with 18 such contracts.
On Wednesday, the US Commerce Department put Huawei on its “Entity List”, essentially requiring US companies to have a special licence to supply parts to the Chinese firm.
This is the US’ latest move to curb Huawei’s dominance in 5G tech-nology following accusations that it is spying for the Chinese government. Last year, the US banned Huawei from supplying 5G equipment in the United States.
Mr Ramakrishna Maruvada, a regional telecoms analyst at Daiwa Capital Markets, said requiring a licence to sell components to Huawei could wreak havoc on supply chains, with possible delays to global 5G network roll-outs.
“Global 5G roll-out delay could become collateral damage if the slugfest continues between the superpowers,” he said. “We are in uncharted territory. Nobody knows what will happen as it all depends on the kind of restrictions imposed on component players.”
If licences are not granted to key suppliers such as chipmakers Qualcomm and Intel and software firm Microsoft, Huawei might need to scramble for alternatives.
LEADING VENDORS IN SUPPLYING 5G NETWORK EQUIPMENT
40 Huawei’s global contracts.
37 Nokia’s global contracts.
18 Ericsson’s global contracts.
Mr Song Seng Wun, an economist at CIMB Private Banking, said: “If equipment can’t come from US companies, Huawei will just have to think of alternative suppliers, including those in China, Japan or Taiwan.”
On its part, Huawei has been trying to diversify its supply sources. For instance, it developed and launched early this year its own Balong 5G modem to rival Qualcomm’s modem for 5G mobile phones.
Dr Chua Hak Bin, an economist at Maybank Kim Eng, said restrictions on Huawei from buying US supplies will threaten its growth and viability.
A similar move against another Chinese mobile network equipment maker, ZTE, last year nearly forced the company to shut down before US President Donald Trump reached a deal with the firm.
Analysts believe that the latest sanction is part of the trade war aimed at choking China’s technological progress, which may well extend beyond Huawei and ZTE.
“Today, the restrictions are over 5G. Tomorrow, the controls could broaden to artificial intelligence, biotechnology and robotics. This is but the beginning of a broader tech war,” Dr Chua said.
CIMB’s Mr Song agreed, noting: “Since Chinese companies account for a third of worldwide applications for major patents related to 5G technology, what Trump is doing is to slow down the lead China has over the US in 5G development.”
It is not known how successful Huawei has been in weaning itself from US suppliers – totalling 33 as at last November – since tensions escalated late last year.
A company spokesman in Singapore declined to reveal how many of its suppliers are still American firms, but said: “Unreasonable restrictions will infringe upon Huawei’s rights and raise other serious legal issues.”
He added that Huawei is ready to work with the US government to ensure product security.
“Restricting Huawei from doing business in the US will not make the US more secure or stronger. Instead, this will serve only to limit the US to inferior yet more expensive alternatives, leaving the US lagging behind in 5G deployment, and eventually harming the interests of US companies and consumers,” he said.
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