The US-China trade and security wars drag on, with the USA continuing in its efforts to pressurize friendly nations – from Italy to India – to follow its lead and bar Huawei and ZTE from 5G networks. So far, however, very few countries have fallen into line (though reviews by the European Union, and several of its individual states, are still ongoing). Malaysia and Norway have become the latest governments to say they will not implement bans or restrict the operators’ freedom to choose their own vendors. And perhaps most importantly to Huawei, a truce has been announced with ARM.
When the USA placed Huawei on its entity list – which means a US company can only trade with Huawei if it gets a special license, none of which have yet been issued – ARM was quick to say it was breaking ties with the Chinese giant. This is despite ARM not being American – it is owned by Japan’s Softbank and headquartered in the UK – and its decision highlighted how the US action could force vendors from other countries to make a choice between continuing to deal with Huawei, and being included in US deals and partnerships.
There was always some uncertainty over the status of ARM China, an arm’s-length unit which was set up after the Softbank acquisition to house certain IP assets, allowing Chinese firms to access these directly. It seemed possible that this unit would allow ARM a way to retain ties with Huawei, which has become a very important partner, especially since it launched a high end server processor based on ARM cores earlier this year – the best chance to date of an ARM-based platform seizing a significant place in the Intel-dominated space. Huawei also bases its smartphone processors on ARM cores.
Two weeks ago, executives from ARM, ARM China and Huawei’s chip division, HiSilicon, clarified the muddy situation by holding a meeting which ended in a group photo call for the media, clearly designed to tell the world that the companies were cooperating fully again. ARM – perhaps heartened by the limited success of the US effort to pressurize companies in allied countries to dump Huawei – said the photo was to “reaffirm the continuing cooperation among ARM, ARM China and Huawei”.
In fact, ARM downplayed the reports, run by the BBC in May, that it had broken ties with its Chinese partner. At the time, the BBC published an internal memo to ARM employees, including those in ARM China, ordering them to cease “all active contracts, support entitlements, and any pending engagements” with Huawei and its subsidiaries. ARM is now stating that it can supply HiSilicon without breaking “applicable laws and regulations”, while its Chinese marketing spokesperson, Liang Quan, insisted nothing had ever really changed.
The truce will be very good news for ARM, partly because of Huawei’s ability to drive its cores into server platforms, at least in Asian markets; and partly because ARM is threatened by the rise of open source architectures like RISC-V, which Chinese companies and government agencies have been backing heavily as a hedge against being barred from using western technologies – and as platforms that might be more susceptible to Chinese influence and control in future.
In other good news for Huawei, the Norwegian Government has said it will not ban the vendor from 5G contracts. Cabinet minister with responsibility for digital activities, Nikolai Astrup, told Reuters: “We have a good dialog with the companies on security, and then it is up to the companies themselves to choose suppliers. We haven’t got any bans against any suppliers in Norway.”
Although Norway is a fairly small market, it was a country that was considering a ban on Chinese vendors on national security grounds, a decision that could have been influential on other European processes. Telenor plans to launch commercial 5G services next year and can now make a free choice of vendors in the core and RAN. In some other countries, like the UK, it is widely expected that there will be restrictions in the core network, but not the RAN, although the UK security review is still underway.
Telenor and Telia have both worked with Huawei in 4G and in 5G trials, while the third MNO, Ice, mainly uses Nokia kit.
In Malaysia, the prime minister, Yang Amat Berhormat Tun Dr. Mahathir bin Mohamad, sent a powerful message that there would be no bans on Huawei, when he attended the signing ceremony for Maxis’s deal to deploy the Chinese firm’s equipment in its forthcoming 5G network.
“The impact of advanced technologies on our progress as a nation is inevitable and we cannot afford to be left behind, especially with Industry 4.0 already upon us,” said the PM. “Collaboration between global players and local vendors is important to support a thriving technology ecosystem in Malaysia. I am pleased to see Maxis and Huawei taking advantage of this environment and supporting the growth of Malaysia’s digital economy.”
But the USA, and particularly Secretary of State Mike Pompeo, is not giving up on its aim of getting other countries to cold-shoulder Huawei. On a recent visit to Italy, Pompeo told a press conference: “To the extent that an Italian company makes a decision to invest in or provide equipment that has a network that our national security teams – our intelligence teams, our Department of Defense – conclude isn’t a trusted network, where we have risk to our information that we can’t figure our way through, we’ll have to make some very difficult decisions.”
He added: “We want to be a partner with Italy in all of these things, but it is not the case that we will sacrifice America’s national security to put our information in a place where there’s risk that adversaries or the Chinese Communist Party might have access to that.”
In fact, Italy is not a big market for Huawei. Wind Tre has been a ZTE user, and was forced to introduce Ericsson to its network too, to mitigate the risk of anti-Chinese sanctions, but Vodafone and TIM mainly work with Ericsson, and new entrant Iliad with Nokia. But no doubt Pompeo is sending a message more broadly to the European states, although he has made similar threats in the UK, Germany and Hungary – all of which largely ignored them, though he was successful in Poland, which has signed a national security agreement that effectively bars Chinese vendors from 5G networks.
The USA has also been bringing pressure to bear on India, where US Commerce Secretary Wilbur Ross told reporters, on a recent visit to Delhi: “Anybody who thinks we are doing this for protectionism simply doesn’t know the facts. We hope that our geopolitical partner India does not inadvertently subject itself to untoward security risk.”
But Sunil Bharti Mittal, chairman of Bharti Enterprises – parent of Huawei user Bharti Airtel – responded to Ross’s comments, saying: “The US advisory is well taken from our point of view. But Indians will have to decide for themselves, given their relationship with China and the larger context.”
The European Union has been pushing for a common security assessment process which could be adopted by all member states, giving them common rules for any 5G procurement, which would be more stringent than current ones, but would not single out any particular vendor.
Sauli Niinistö, president of Finland, has revealed a risk assessment of 5G systems, which could form the basis of the EU-wide approach. During a press conference with President Donald Trump in the USA last month, Niinistö said the assessment would help determine “which kind of tools we need to protect ourselves”.
Most member states already submitted their individual security evaluations in July and a pan-EU plan is due to be completed this month.
At the same press conference, Trump said: “It is critical that we use safe and trustworthy technology providers, components, and supply chains.” And he called out national supplier Nokia saying: “We’re also glad that the Finnish company, Nokia — it’s a great company — a global leader in 5G technology, is developing its cutting-edge products right here in the United States at Bell Labs in New Jersey.”
Meanwhile, Huawei said recently that it expected to make 1.5m 5G base stations next year and was in a position to produce them without any US components, though CEO Ren Zhengfei told reporters his preference would be to return to using US parts because of Huawei’s “emotional ties” with its established US suppliers.
But he was also trying to downplay the effect of US hostility on his company’s fortunes. “Europe still presents Huawei with a wide scale of opportunities. Actually, we still see many opportunities all around the world. I think many people are quite tolerant of us, and that makes me happy,” he said.