The UK government has now signed off on letting Chinese telecommunications giant Huawei help build ‘non-core’ parts of the country’s new 5G infrastructure, including antennas and other network components. That decision has drawn criticism from some quarters and put the UK at odds with its intelligence allies the US, which has been pressing other nations to ban the use of the Chinese firm’s equipment on security grounds, and Australia and New Zealand, which have both blocked their networks from using Huawei’s 5G gear.
The fear is that countries which allow Huawei technology inside their 5G networks will leave themselves open to being hacked by Chinese spies, who could eavesdrop on sensitive phone calls and potentially gain access to counter-terrorist operations. So, just what is the extent of the involvement of Huawei in the UK’s 5G network, and what potential risks, if any, does that create?
Huawei banned from providing core parts of UK 5G network
Following a meeting of ministers on the National Security Council in April, Chinese telecoms supplier Huawei was banned from supplying core parts of the UK’s future 5G mobile phone network. That decision was made amid growing concerns that the company’s technology could pose a long-term security risk.
Although the UK has taken a cautious approach to Huawei, the intelligence agencies believe the risks could be mitigated and have not flagged concerns about Chinese state influence. The UK’s decision not to call for a blanket ban is seen as its way of securing the network against interference but also making sure its networks are competitive, particularly given the dearth of suppliers that are capable of making 5G equipment that’s as reliable and inexpensive. It’s also a diplomatic move, allowing the UK to seek the middle ground in the bitter dispute between the United States and China over the next generation of communications technology.
What security risks does Huawei pose?
The argument of the US and some UK government ministers is that by allowing Huawei to control the technology that sits at the heart of vital communications networks, it will have the capacity to disrupt vital communications and conduct espionage during future disputes. These risks will be heightened as more everyday items, from domestic appliances to autonomous vehicles, become connected to the internet.
Huawei is a privately-owned company which denies any involvement with the Chinese government. However, there is evidence to suggest that no major Chinese company is ever independent of the Chinese state. This is supported by China’s National Intelligence Law, passed in 2017, which states that organisations must ‘support, co-operate with and collaborate in national intelligence work’.
Huawei’s response to accusations that it poses a security threat has been simple. The company’s leaders have said there is no evidence to suggest that it works inappropriately with the Chinese government and identified a number of ways to reduce the risks which have worked successfully in other countries.
What is the likely impact on the semiconductor industry?
The fallout of the blanket ban of Huawei infrastructure in a number of global markets and the partial ban in the UK will undoubtedly have a big impact on the semiconductors industry. Huawei spent $15.9 billion on semiconductors in 2018 according to the IHS Markit OEM Semiconductor Spending & Design Activity Intelligence Service. Memory represents a significant part of that spending, with $1.7 billion spent on DRAM and $1.1 billion spent on NAND flash memory for the year. That suggests there will be no winners from the Huawei ban, with key semiconductor and memory market vendors on both sides of the Atlantic likely to feel the pain.
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