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U.S. Telecommunications Networks Barred From Using Foreign Suppliers

May 16, 2019
Originally published on May 22, 2019 8:36 pm
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NOEL KING, HOST:

The Trump administration seems to be going after the Chinese telecom giant Huawei. President Trump has signed an executive order declaring a national emergency. It blocks U.S. telecom networks from using equipment from foreign suppliers that are deemed to be a national security risk. Now, this order doesn't name Huawei, but the company is believed to be the target. Elliott Zaagman is a columnist for the China-focused tech news website technode.com. He's in Shenzhen, where Huawei has their headquarters.

Hi, Elliott.

ELLIOTT ZAAGMAN: Hi. Glad to be here.

KING: Why is the United States doing this now? What's the concern about Huawei?

ZAAGMAN: Well, if you just look at the headlines, we have Trump doubling down on the trade war last week and then going after Huawei this week. But it's a much bigger issue than just the trade war. The U.S. has had an issue with Huawei being a supplier of 5G components for quite some time now. However, Huawei is a first mover in 5G networks all around the world. And the second half of this year is really key for that. It's when a lot of these foundations are going to be laid out. So what we're seeing is that the U.S. has been pushing their European allies to exclude Huawei from their 5G network, really with the thinking that, you know, if you control the telecommunications network, it's like controlling a sea lane. So they're very concerned about the Chinese having control over these very, very crucial lanes.

However, Huawei - they have competitive technology, and they can underbid their competitors. So a lot of carriers in Europe are not very enthusiastic about excluding Huawei from their networks. And so the U.S. is going after them at a number of different angles. The U.S. - or Huawei has a lot of deep ties to the Chinese government, and the U.S. does not trust them. And they're pulling out all the stops to try to prevent them from supplying the networks to U.S. allies.

KING: How might this executive order affect Huawei?

ZAAGMAN: Well, it's not certain for sure, but it will impact them, certainly. A source of mine at Huawei said that about $11 billion last year was how much Huawei spent on components from the United States.

KING: Wow.

ZAAGMAN: That's a very significant number. I mean, Huawei's a big company. They do over $100 billion in sales. They did that last year. So - but we don't quite know all the details. And Huawei does not know all the details of exactly how this will play out. So it is certain that it will impact Huawei. That's for sure. However, it won't be like the ZTE, where they don't have the same kind of core technology. Huawei will probably still survive in one way or another.

KING: Elliott Zaagman - he's a columnist for the China-focused tech news website technode.com.

Thanks, Elliott.

ZAAGMAN: Thank you, and happy birthday to my mother.

KING: (Laughter) Happy birthday, Mrs. Zaagman. Transcript provided by NPR, Copyright NPR.