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12 January 2021

As in 2020, many 5G risks are related to uncertainty over US-China relations

In the ongoing drama surrounding the transition to a new presidency in the USA, the potential impact on the ‘5G race’ is one of many unknowns. The Trump administration took a hard-line approach to trade and security battles with China, of course, and 5G became one of the high profile fights that took place within that context.

The incoming Biden administration may take a more conventionally diplomatic approach, and even pull back from some of the strongest sanctions against Chinese technology companies, notably the ban on access – for Huawei in particular, or any of its component suppliers – to US technology. But a complete change of policy, or a significant relaxation of the sanctions, is highly unlikely in the current geopolitical climate.

It is likely, then, that Wireless Watch will devote as many column inches to the impact of US/Chinese hostilities and rivalries in 2021 as we did in 2020. The dilemmas these raise affect more than Huawei and its direct supply chain. Ericsson’s lobbying of the Swedish authorities against a full ban on Huawei 5G equipment shows that potential Chinese counter-sanctions against western vendors could more than cancel out the benefits of reduced competition in markets that decide to bar Chinese suppliers – especially in the next 1-2 years, when China’s operators will be procuring and building out networks at an unsurpassed (probably unsurpassable) rate (see analysis below).

There are many uncertainties in the early weeks of 2021, epitomized by the New York Stock Exchange’s flip-flopping over whether to delist Chinese operators. Many governments are still considering whether to impose official sanctions on Huawei, and perhaps waiting for indications from the new US government after next week. China’s administration may also be waiting to see how the wind blows from Washington after January 20, and may then decide whether to impose restrictions of its own.

Meanwhile, some operators are pinning their hopes on a more open RAN ecosystem to provide them with new supplier options, while those with more urgent timescales will continue to play it safe with established vendors that seem least vulnerable to government policies, in any specific territory. The relationship between the USA and China, in 5G as in other matters, will certainly shift this year, but it is a complex question how far that will alter the balance of power, or operators’ commercial choices, during the year ahead.