Huawei plans legal action against spying allegations
February 19, 2019 Category IT & Telecom, Weekly
Huawei Technologies plans legal action against accusations by official agencies of several countries that its telecom equipment may be used by the Chinese authorities to spy on its clients.
U.S. Secretary of State Mike Pompeo said during a visit to Budapest, Hungary, that the presence of Huawei complicates the country’s partnership with the U.S. Earlier, U.S. ambassador to the EU Gordon Sondland made a similar warning. U.S. Vice President Mike Pence said in Warsaw that the U.S. welcomes Poland’s commitment to “protecting the telecoms sector from China”. Poland arrested a Chinese employee of Huawei and a former Polish security official on spying allegations. Chinese Foreign Ministry Spokesperson Hua Chunying said that U.S. actions using state agencies to suppress and block Chinese high-tech companies are unjust and immoral, and totally unfit for a major world power. Separately, Republican Senator Marco Rubio has proposed legislation that would restrict and tax Chinese investments in the U.S. to counter Beijing’s “Made in China 2025” industrial modernization program, which includes direct subsidies for domestic companies developing advanced semiconductors.
Some dissenting voices disagree with the allegations against Huawei. Robert Hannigan, Britain’s former Director of spy agency GCHQ, has characterized the “chorus of voices” calling for a blanket ban on Chinese companies like Huawei Technologies from telecommunications networks in Western countries as being “short on technical understanding” of cybersecurity and the complexities of 5G networks. While GCHQ’s National Cyber Security Center “has been blunt about Huawei’s shortcomings in security engineering and in its general attitude to cybersecurity”, it has “never found evidence of malicious Chinese state cyber activity through Huawei”, Hannigan wrote in the Financial Times.
That assessment is based on GCHQ’s evaluation of Huawei’s presence in British telecoms networks over some years, which has given it detailed insights into the company’s hardware, code, processes and policies. A blanket security ban based on a company’s nationality is likely to be ineffective as state-linked cyber espionage attacks on IT-managed services providers around the world do not require the manipulation of companies such as Huawei, he added. Hannigan is now a Senior Fellow at Harvard Kennedy School’s Belfer Center for Science and International Affairs. “Assertions that any Chinese technology in any part of a 5G network represents an unacceptable risk are nonsense,” he concluded. Hannigan said that the UK and other European countries should “hold their nerve” and base decisions on Chinese involvement in future telecom networks on technical expertise and rational risk assessment instead of “political fashion or trade wars”.
The CIA and the National Security Agency (NSA) have studied Huawei’s operations for over a decade, but they have not found a “smoking gun” showing conclusively that Huawei executives have helped Chinese security services penetrate America’s wireless networks. Still, President Trump is considering to order an new investigation which could lead to banning Huawei and other Chinese IT companies from selling their products in the U.S. and banning U.S. companies from selling components to them. Chinese telecom sales to the United States are tiny. Huawei has effectively been blacklisted by Washington for several years and made little market headway beyond limited sales in rural markets.
The company also received some good news: Philippines-based network operator Globe Telecom said the security concerns had been overblown and that it would push on with a planned roll-out of its 5G commercial services in the second quarter of the year.
Huawei became the world’s third-largest buyer of semiconductors last year, with its expenditure on purchasing chips witnessing the largest growth among the top five companies, according to research firm Gartner. Huawei spent over USD21 billion on semiconductor chips last year, accounting for 4.4% of the total worldwide market. It increased its chip spending by 45.2%, overtaking Dell and Lenovo Group to the third spot. Three other Chinese companies, Lenovo, BBK Electronics and Xiaomi Corp, ranked in the top 10 semiconductor buyers in 2018. Samsung Electronics and Apple remained the top two semiconductor chip buyers in 2018 with a 17.9% market. Huawei shipped 30 million smartphones in the domestic market in the fourth quarter of last year, up 23.3% year-on-year. It topped the list with a market share of 29%, according to research firm IDC.
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