SoftBank Group Corp, Japan’s third largest telco, plans to replace 4G LTE network equipment from China’s Huawei Technologies Co Ltd with hardware from Nokia and Ericsson, Nikkei Asian Review reported on Thursday, without citing sources. SoftBank is also expected to place orders with the two European companies for its 5G networks, Nikkei reported. SoftBank is the only telecom carrier in Japan that uses Huawei equipment, according to the news outlet. Nokia and Ericsson are already big suppliers to SoftBank.
The move comes at a time of heightened scrutiny of Chinese tech firms by the United States and some prominent allies over ties to the Chinese government, driven by concerns they could be used by Beijing for spying. The U.S., Australia and New Zealand have already banned Huawei from their countries 5G networks while Canada and the U.K. are considering that.
Last week, British multinational telecoms company BT confirmed it has been removing Huawei equipment from the core of its 3G and 4G networks since 2016, and will be excluding the Chinese company when selecting vendors for its 5G core.
A SoftBank spokesman said the report was “based on speculation and no decision has been made.” It also has the longest running relationship with Huawei among Japan’s top three telcos, but the firm has previously said that the amount of equipment it uses from Chinese makers “is relatively small.”
Replacing the 4G equipment, which Nikkei reported will be done over several years, is likely to be time-consuming and expensive, industry sources have said.
The Nikkei report on the supplier switch comes as SoftBank is preparing to list its telecoms unit in Tokyo on Dec. 19. The report also comes on the heels of Japan issuing a policy document on maintaining cybersecurity during procurement.
While Huawei was not explicitly named, sources have said that the policy document was aimed at preventing Japan government procurement from the company as well as China’s ZTE Corp.
Huawei has already been locked out of the U.S. market, and Australia and New Zealand have blocked it from building 5G networks amid concerns of its possible links with China’s government. Huawei has said Beijing has no influence over it.
Japan’s decision to keep Huawei out would add to the woes of the firm, whose chief financial officer was recently arrested by Canadian officials for extradition to the United States.
“It’s extremely important to avoid buying equipment that includes malicious functions like stealing or destroying information or halting information systems,” Nikkei reported Japanese Prime Minister Shinzo Abe as saying.
Addendum: The Financial Times reports: Huawei spat comes as China races ahead in 5G (on line subscription required)
A leaked memo, apparently written by a senior National Security Council official, revealed as far back as the start of this year exactly how worried the US is about Huawei. The rise of the Chinese company to become the world’s biggest supplier of telecoms equipment has given China a huge boost over the US in the race to introduce and develop 5G, the next generation of mobile communications, the memo complained.
“We are losing,” it said. “Whoever leads in technology and market share for 5G deployment will have a tremendous advantage towards [ . . .] commanding the heights of the information domain.”
Eleven months on, those fears have mushroomed into open conflict between Washington and Beijing, with American officials pushing allied countries to ban Huawei from building their 5G networks, citing concerns over security and the company’s unclear links to the Chinese state. The arrest and planned extradition to the US of Meng Wanzhou, Huawei’s chief financial officer and daughter to the company’s founder, has further exacerbated the spat.
Several countries have begun to trial 5G networks, though the full international standards have not yet been agreed. The shift to the new technology carries profound implications, and countries are wary of being left behind. 5G is “by no means simply a ‘faster 4G’”, the US memo said, describing it instead as “a change more like the invention of the Gutenberg Press”. It will bring higher speeds, lower lag times between network and device, and a much larger capacity to transfer data. Together, these features are expected to underpin self-driving cars, AI and machine-to-machine communications that will transform the way everything from homes to hospitals to factories operate.