U.S. Government Attempts to Strangle Huawei; China-U.S. Trade War likely to Accelerate into HYPER-DRIVE mode

On Friday, the U.S. government said it would impose export restrictions designed to cut off Chinese tech giant Huawei Technologies Co. from overseas suppliers, threatening to ignite a new round of U.S.-China trade tensions.  The U.S. Commerce Department said its new sanctions would “narrowly and strategically target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology.”

These new restrictions stop foreign semiconductor manufacturers whose operations use U.S. hardware, software and technology from shipping products to Huawei without first getting a license from U.S. officials, essentially giving the U.S. Commerce Department a veto over the kinds of technology that Huawei can use.

The restriction further tightens the U.S. export-control system’s existing rules related to Huawei. Washington alleges that Huawei gear could be used by Beijing to spy globally, which Huawei has repeatedly denied.

A logo of Huawei retail shop is seen through a handrail inside a commercial office building in Beijing.

Photo credit: Andy Wong, Associated Press

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U.S. Commerce Secretary Wilbur Ross said Friday that Washington wants to prevent Huawei from evading sanctions imposed earlier on its use of American technology to design and produce semiconductors abroad.  “There has been a very highly technical loophole through which Huawei has been able, in effect, to use U.S. technology with foreign fab producers,” Ross said in an interview on Fox Business Network. He said the changes announced Friday were tailored moves “to try to correct that loophole and make sure that the American fab foundries are competing on an equal footing with the foreign ones.”

Also on Friday, a senior administration official said there were “legal, human rights, and strategic rationales” for the actions against Huawei. Those included Huawei’s alleged theft of intellectual property and aid in developing surveillance technology and new weapon systems, the official said.

Under the new rules, the department can block the sale of semiconductors manufactured by Taiwan Semiconductor Manufacturing (TSMC) for Huawei’s HiSilicon subsidiary, which designs chips for the company, as well as chips and other software produced by manufacturing facilities in Taiwan, China and South Korea, which use American chip-making technology. The Commerce Department already had the ability to license software shipments from U.S.-based facilities.

Companies can apply for a license to continue supplying tech products to Huawei, but the administration said the presumption would be to deny those requests.

John Neuffer, the president of the Semiconductor Industry Association, which represents chip makers, said his group was concerned that the rule would “create uncertainty and disruption for the global semiconductor supply chain.” He added, however, that it appeared less damaging than broader approaches the administration had previously considered.

Huawei had no immediate comment.

China’s foreign ministry, in a statement, urged the U.S. to immediately halt “its unreasonable suppression against Huawei.”

“The U.S.’s practices not only harm the legitimate rights and interests of Chinese enterprises, but also do not accord with the interests of U.S. enterprises, and cause damage to the global industrial chain, supply chain and value chain,” it said.

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On Sunday, China’s commerce ministry said it will take “all necessary measures” in response to new U.S. restrictions on Chinese tech giant Huawei’s ability to use American technology, calling the measures an abuse of state power and a violation of market principles.

An unidentified spokesperson quoted Sunday in a statement on the China ministry’s website said the regulations also threatened the security of the “global industrial and supply chain.”

“The U.S. has utilized national power and used the so-called national security concern as an excuse, and abused export controls to continue to suppress some particular companies in other countries,” China’s commerce ministry said in today’s statement.

“China urges the U.S. to immediately cease its wrong actions,” the ministry added, calling the restrictions a “serious threat to global supply chains.”

China’s retaliation could take the form of restrictions on U.S. tech firms (Qualcomm, Apple. Intel, Nvidia, AMD, Broadcom, Cisco, even Boeing) selling their products in China.

Victor Gao, vice-president of the Centre for China and Globalisation, a Beijing-based think tank, said there were many ways in which China could retaliate for the new restrictions on Huawei, including selling its huge holdings of U.S. treasury bonds or halting any future purchases, and tightening its controls on Apple products.

“For example, if Beijing declared that all Apple products made in China had to be inspected, which would delay their shipment, in three months, Apple would be dead,” he said.

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China’s state-run newspaper reported on Sunday that the Chinese government was ready to retaliate against the U.S..  The source, who is described as close to China’s government, told the state-run Global Times that China was planning countermeasures, such as “imposing restrictions” against U.S. companies like Apple, Cisco, and Qualcomm. The source also suggested the possibility of China halting Boeing airplane purchases.

“China will take forceful countermeasures to protect its own legitimate rights” if the Trump administration goes ahead with the plan to block essential suppliers of semiconductors from selling those components to Huawei.

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Backgrounder:

U.S. government officials have repeatedly accused Huawei of stealing American trade secrets and aiding China’s espionage efforts, ramping up tensions with the rival superpower while both sides were involved in a long-simmering trade war.

As a result, Huawei has increasingly relied on domestically manufactured technology, but the latest rules will also ban foreign firms that use US technology from make semiconductors to Huawei without US permission.  The new restrictions will cut off Huawei’s access to one of its major suppliers of semiconductors- Taiwanese chipmaker TSMC (world’s largest silicon foundry).

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May 18th UPDATE:

Huawei on Monday assailed the latest U.S. move to cut it off from semiconductor suppliers as a “pernicious” attack that will put the Chinese technology giant in “survival” mode and sow chaos in the global technology sector.

“The decision was arbitrary and pernicious and threatens to undermine the entire (technology) industry worldwide. This new rule will impact the expansion, maintenance, and continuous operations of networks worth hundreds of billions of dollars that we have rolled out in more than 170 countries,” Huawei said in a statement.

The ban also went against the US government’s claim that it is motivated by network security, the company said.

“The US is leveraging its own technological strengths to crush companies outside its own borders. This will only serve to undermine the trust international companies place in US technology and supply chains. Ultimately, this will harm US interests,” said Huawei.

https://www.globaltimes.cn/content/1188683.shtml

 

 

References:

https://www.wsj.com/articles/u-s-moves-to-cut-off-chip-supplies-to-huawei-11589545335

https://abcnews.go.com/US/wireStory/china-warns-us-measures-huawei-rules-70728162

http://www.globaltimes.cn/content/1188491.shtml

https://mashable.com/article/china-us-retaliation-huawei/

https://www.scmp.com/economy/china-economy/article/3084710/china-hits-back-americas-unreasonable-suppression-huawei

U.S. government in talks with Intel, TSMC to develop chip ‘self-sufficiency’

The coronavirus pandemic has underscored longstanding concern by U.S. officials and executives about protecting global supply chains from disruption. Administration officials say they are particularly concerned about reliance on Taiwan, the self-governing island China claims as its own, and the home of Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chip manufacturer and one of only three companies capable of making the fastest, most-cutting-edge chips (the two other foundries are Samsung and Intel).

Officials from the U.S. government are in talks with Intel and Taiwan Semiconductor Manufacturing to build chip factories in the U.S., the Wall Street Journal reported, citing sources familiar with the matter. The U.S. government believes the pandemic showed how reliant the U.S. is on Asian factories and it now wants to promote more tech self-sufficiency.

“The administration is committed to ensuring continued U.S. technological leadership,” a senior official said in a statement. “The U.S. government continues to coordinate with state, local and private-sector partners as well as our allies and partners abroad, to collaborate on research and development, manufacturing, supply-chain management, and workforce development opportunities.”

HiSilicon, owned by Huawei, is a fabless semiconductor company which doesn’t have its own manufacturing plant. It relies on foundry companies like Taiwan Semiconductor Manufacturing Co. to make its chips. The Trump administration is preparing rules that could restrict TSMC’s sales to HiSilicon. Huawei may be storing up chip inventories in anticipation of such tighter restrictions. Huawei may shift some of its orders to Chinese foundry Semiconductor Manufacturing International Corp. (SMIC), but technology there still lags behind industry leaders like TSMC and Samsung.

Ultimately SMIC’s capabilities could be hampered if the Trump administration decides to dial up the pressure in its campaign against China. The Commerce Department said last week that it would expand the list of U.S.-made products and technology shipped to China that need to be reviewed by national security experts before shipping. SMIC depends on foreign semiconductor manufacturing equipment, including some from the U.S.

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Intel VP of policy and tech affairs Greg Slater said Intel’s plan would be to operate a plant that could provide advanced chips securely for both the government and other customers. “We think it’s a good opportunity,” he added. “The timing is better and the demand for this is greater than it has been in the past, even from the commercial side.”

Intel Chief executive Bob Swan sent a letter to Defense Department officials on 28 April, saying the company was ready to build a commercial foundry in partnership with the Pentagon. Strengthening U.S. domestic production and ensuring technological leadership is “more important than ever, given the uncertainty created by the current geopolitical environment,” Swan wrote in the letter. “We currently think it is in the best interest of the U.S. and of Intel to explore how Intel could operate a commercial U.S. foundry to supply a broad range of microelectronics,” the letter said. The letter was then sent to Senate Armed Services Committee staffers, calling the proposal an “interesting and intriguing option” for a U.S. company to lead an “on-shore, commercial, state of the art” chip foundry.

TSMC has been in talks with people at the Commerce and Defense departments as well as with Apple, one of its largest customers, about building a chip factory in the U.S., other sources said. In a statement, TSMC said it is open to building an overseas plant and was evaluating all suitable locations, including the US. “But there is no concrete plan yet,” the company said.

Some U.S. officials are also interested in having Samsung, which already operates a chip factory in Austin, Texas, expand its contract-manufacturing operations in the U.S. to produce more advanced chips, more sources said.

A trainee at a facility of the U.S. chip maker GlobalFoundries in Germany last year. The U.S. is looking to strengthen its own production of semiconductors.              PHOTO: SEBASTIAN KAHNERT/DPA/ZUMA PRESS

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Taiwan, China and South Korea “represent a triad of dependency for the entire US digital economy,” said a 2019 Pentagon report on national-security considerations regarding the supply chain for microelectronics. The US has dozens many semiconductor factories, but only Intel’s are capable of making the chips with transistors of 10 nanometers or smaller. The company however mostly produces for its own products. Among companies that make chips on contract for other companies, only TSMC and Samsung make those high-performing chips. Many US chip companies such as Qualcomm, Nvidia, Broadcom, Xilinkx and Advanced Micro Devices rely on TSMC for the manufacture of their most advanced products. Intel also makes chips with TSMC, according to TSMC’s 2019 annual report.

The Semiconductor Industry Association is conducting its own study on domestic chip production. The report is expected to recommend the US government set up a billion-dollar fund to push domestic chip investment, another source said. Another proposal by SEMI, an industry group representing semiconductor manufacturing equipment makers, involves giving tax credits to chip makers when they purchase and install equipment at factories in the US.

The Commerce Department is also considering a rule aimed at cutting off Huawei’s ability to manufacture chips at TSMC (see Addendum below). President Donald Trump has approved the move, but Commerce Department officials are still working through preliminary drafts, sources said.

May 16, 2020 Addendum:  U.S. Moves to Cut Off Chip Supplies to Huawei 

New restriction stops foreign semiconductor manufacturers whose operations use U.S. software and technology from shipping products to Huawei without first getting a license from U.S. officials

References:

https://www.wsj.com/articles/trump-and-chip-makers-including-intel-seek-semiconductor-self-sufficiency-11589103002

https://www.wsj.com/articles/china-chases-self-reliance-in-chips-but-the-u-s-still-holds-a-trump-card-11588932443

China Mobile and Huawei deploy 5G base station at 6,500m on Mt Everest!

China Mobile and Huawei have together built the highest elevation 5G (or any other) base station on this planet– at 6500 meters (21,300 feet) at Mount Everest where there are no roads or trails. [Note that the summit is 8,848 meters, but will be measured again this year].

The base station along with two others at lower elevations, will enable China Mobile to run its 5G wireless network on the world’s highest mountain.  It will surely be a great aid to climbers which had to previously use satellite phones for ultra high altitude communications with their high camps.

Zhou Min, general manager of Tibet branch of China Mobile, said the facility will ensure reliable telecommunication for the activities of mountain climbing, scientific research, environmental monitoring and high-definition live streaming. The building of 5G infrastructure is in tandem with the measuring of the height of the peak, which officially started on Thursday.

“It comes on the 60th anniversary of the first successful ascent of Mount Everest from the northern slope and the 45th anniversary of China’s first official accurate measurement of Mount Everest,” declared the press release. “Significantly, the 5G network on Mount Everest will provide communication services for the 2020 Mount Everest re-measurement.”

How high is Mount Everest in meters, feet, km & miles

The base station launch marks the 60th anniversary of the first successful ascension of Mount Everest from the northern slope. Base stations are now at the Mount Everest Base Camp at 5,300 metres, the Transition Camp at 5,800 metres, and the Forward Camp at 6,500 meters.

A China Mobile technician told state media that the new 5G network is fast enough for climbers and scientists to have 4K and VR live streaming on the mountain.

Huawei’s 5G AAU and SPN technologies were applied at the base stations, managed and maintained by a dozen network specialists stationed there 24/7 at altitudes of 5,300 meters and above.

Huawei claims that its 5G AAU is highly integrated into a compact size, making it easy for deployment and installation and it fits particularly well for infrastructure in extreme environments such as Mount Everest. In this project, a network in the “stand-alone plus non-stand alone” (SA+NSA) mode connects five 5G base stations.Meanwhile, the 5G connectivity is achieved by Huawei’s Massive MIMO technology.

Huawei’s Massive MIMO comes with three-dimensional narrow beams. At an altitude of 5,300 meters, the 5G download speed exceeded 1.66 Gbps, where the upload speed tops 215 Mbps, claims Huawei. Some of the other technologies being employed by the Chinese telecom equipment giant are Intelligent OptiX Network and HoloSens intelligent video surveillance system.  The 5G base station at Everest base camp includes a Gigabit ONT, Huawei’s 10G PON OLT and 200G ultra-high-speed transmission platform, and the HoloSens intelligent video surveillance system.

Pictures of 5G Base station at 6500 meters   Photo credits: Huawei

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The press release concluded as follows:

Huawei strongly believes that technology means to make the world better.  The beauty of Mount Everest can be displayed via 5G high-definition video and VR experience, which also provides further insights for mountaineers, scientists and other specialists into the nature. The ground-breaking establishment on Mount Everest once again proves that 5G technology connect mankind and the Earth harmoniously.

References:

https://www.huawei.com/en/press-events/news/2020/4/china-mobile-huawei-deliver-world-highest-5g

https://www.bloombergquint.com/technology/5g-signal-now-available-on-mount-everest-peak

https://timesofindia.indiatimes.com/gadgets-news/china-mobile-and-huawei-establish-worlds-highest-5g-site-on-mount-everest/articleshow/75493507.cms

 

 

Huawei’s “resilient” Q1-2020 results and coronavirus commentary

Undaunted by the U.S. campaign to ban its network equipment and smart phones, Huawei reported results for the first quarter 2020 that were in line with expectations, despite the effects of the coronavirus pandemic. The company said its business is continuing to grow, albeit at a slower pace.

Revenue in the first quarter rose by about 1% to 182.2 billion yuan ($25.72 billion), vemart phones, China tech giant rsus a 39% growth posted a year ago. Its net profit margin over the period narrowed to 7.3% from about 8% a year ago.  Huawei being a privately owned company did not disclose its net profits.

“The growth rate has slowed, but this is also a resilient performance in the face of both the entity list and the coronavirus we are facing at this moment,” Vice President Victor Zhang said in a statement on Tuesday.

This represents a significant slowdown from the 19 percent sales growth for 2019. The company earlier stated that 2020 would be a very difficult year, its first full year with U.S. sanctions. Along with the effects of the coronavirus outbreak, 2020 “will be the most difficult year” for Huawei, rotating chairman Eric Xu said.

Huawei to supply equipment for 5G network in UK

As for the impact from the coronavirus pandemic, Zhang said it was difficult to gauge what that would be in the short or long term, as he presented the results from London rather than Huawei’s Shenzen base to mark 20 years of business in Europe.

The company provided enlightening comments on the coronavirus in its earlier referenced statement:

Networks are a lifeline for people from all walks of life during this public health crisis, so ensuring normal network operations is of paramount importance. Huawei is doing everything in its capabilities to help carriers ensure stable and secure network operations. Together, we are working to meet the network demand created by social distancing as people switch to telecommuting, distance education, and e-commerce for daily necessities.

Since the outbreak, Huawei and its partners have rapidly launched many 5G- and AI-powered medical applications. We are using our expertise in communications technologies to help fight the pandemic and save more lives. The AI-assisted coronavirus diagnosis solution cuts CT scan review times from 12 minutes down to 2, helping doctors improve their diagnostic efficiency. 5G-enabled remote video consultation helps mitigate shortages of frontline experts and increases the efficiency of diagnosis and treatment of critical patients. AI-powered thermal imaging devices can take temperatures, increasing the efficiency of infection prevention and control in public places. In addition, Huawei has been doing its best to get masks, test kits, and other protective supplies to the countries and organizations that need them.

A seed that survives the storm will sprout and then blossom. Even though it is impossible to know when the tides of this pandemic will turn, we at Huawei believe that this challenge will be overcome by standing together.

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In March, Huawei reported financial results for 2019, recording  a $12 billion revenue shortfall that it attributed to the entity listing, which effectively blacklisted Huawei and numerous affiliates by restricting sales of certain products from U.S. suppliers to the vendor.

Huawei’s consumer segment was particularly hit by the U.S restrictions in the second half of last year. As one of the world’s largest smartphone makers, Huawei was unable to access Google’s proprietary Android operating system and was forced to launch new devices without access to the popular Google Play store.

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References:

https://www.huawei.com/en/press-events/news/2020/4/huawei-announces-q1-2020-business-results

https://www.reuters.com/article/us-huawei-tech-results/huawei-first-quarter-revenue-growth-slows-sharply-amid-us-ban-virus-headwinds-idUSKBN2230WV

 

Europe and U.S. to delay 5G deployments; China to accelerate 5G

Up until the COVID-19 pandemic hit the world hard in late February, 5G seemed a priority for most wireless network operators. Now, with across the board cutbacks everywhere, it will be much further down the must do list for 2020.

In the absence of any new 5G applications or completion of 3GPP 5G Phase 2 and ITU-R IMT 2020, 5G was not expected to ramp this year, despite ridiculous hype and false claims (especially ultra low latency which has not yet been specified let alone standardized yet).

Now the new technology faces an unprecedented slow down to launch and expand pilot deployments.  Why? It’s because of the stay at home/shelter in place orders all over the world.  Non essential business’ are closed and manufacturing plants have been idled.  Also, why do you need a mobile network if you’re at home 95% of the time?

One reason to deploy 5G is to off load data (especially video) traffic on congested 4G-LTE  networks. But just like the physical roads and highways, those 4G networks have experienced less traffic since the virus took hold.  People confined to their homes need wired broadband and Wi-Fi, NOT 4G and 5G mobile access.

“5G deployment in Europe will certainly be delayed,” said Eric Xu, one of Huawei’s rotating CEOs, during a Huawei (private company) results presentation today.  Xu also told reporters the delays could last until “the time when the pandemic is brought under control.”

Eric Xu said the current crisis would “certainly” delay 5G rollouts

Huawei’s Eric Xu said the current crisis would “certainly” delay 5G rollouts

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Answering questions about its annual report, published on Tuesday, Huawei vice-president Victor Zhang said there would “definitely” be an impact but it would likely be worse in Europe than in the UK.

A few data points from European telcos in the aftermath of COVID-19:

  • On March 20, the UK’s BT reported a 5% drop in mobile data traffic, compared with normal levels.
  • Today, Belgian incumbent Proximus said capital expenditure would go down this year to offset the impact of COVID-19 on profits.
  • A growing number of European countries are delaying 5G spectrum auctions, as restrictions related to the Covid-19 pandemic make it difficult to maintain planning. The EU’s deadline of June for the release of the 700 MHz band for 5G will be missed by several countries, including Spain and Austria.
  • In Portugal, MEO, NOS and Vodafone Portugal now face a further wait for frequency rights in the 700MHz, 900MHz, 1800MHz, 2.1GHz, 2.6GHz and 3.6GHz bands
  • German company United Internet’s CEO, Ralph Dommermuth, said that the construction of subsidiary 1&1 Drillisch’s 5G network would experience delays due to current measures adopted in the country to prevent a further spread of the COVID-19 pandemic in Germany, local paper Handelsblatt reported.
  • In Sweden, which has controversially avoided a total lockdown, telecom incumbent carrier Telia has now cut dividends as it prepares for a hit.

Huawei’s statements imply the U.S. will also face a delay in 5G rollouts.  It has overtaken Italy as the country with the highest number of coronavirus infections, and its response to the outbreak has been lackluster and confusing at best, horrendous at worst.

As a mobile-only network equipment vendor, Ericsson looks the most exposed to a 5G slow down.  More than 50% of its business is generated in Europe and the Americas, where the rate of COVID-19 infections is rising.

Although less reliant on the 5G wireless base station business than Ericsson, Nokia could also be in trouble due to the slowdown in 5G deployments.  Approximately 30% of its sales came from North America last year, and another 28% from Europe.

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“After the pandemic was brought under control, China has accelerated its 5G deployments,” according to Huawei’s Xu.

China has accelerated its own 5G deployment after the number of cases of Covid-19 subsided, according to Xu, but in other countries, it would depend “on several factors”, including whether telecoms companies had the budget and resources to “win back the time” lost.

Indeed, China Mobile this week awarded 5G contracts worth $5.2 billion with approximately 90% of the contracts going to Huawei and ZTE. Ericsson won contracts worth RMB4.2 billion ($593 million) and small local vendor CICT will net RMB965 million ($136 million). Nokia reportedly bid, but failed to win any of the contracts from China Mobile.

This centralized procurement involves 28 China provinces, autonomous regions and municipalities directly under the central government. According to C114, the total demand is 232,143 5G base stations.  At the end of February, the number of 5G base stations owned China Mobile has exceeded 80,000.

References:

https://www.bbc.com/news/technology-52108172

https://www.lightreading.com/5g/covid-19-will-help-china-to-extend-its-5g-lead/d/d-id/758596?

https://www.lightreading.com/5g/5g-auctions-delayed-across-europe-due-to-covid-19/d/d-id/758606?

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9 April 2020 Update:

5G is looking like a casualty of COVID-19

All 5G companies had accomplished was the design of a technology that provides faster connections and additional capacity on smartphone networks. A few have already been launched, and South Korea, the most advanced market, already has millions of subscribers. Yet local news reports suggest many have been underwhelmed by the 5G experience. For service providers, it has had minimal impact on sales while marketing and rollout costs have made a huge dent in profits.

This will discourage 5G investment in countries under COVID-19 lockdown. As customers downgrade to cheaper services and dump TV sports packages rerunning last year’s highlights, many operators will cut spending. Concerned about exposing field workers to unnecessary health risks, they will prioritize the maintenance of networks already used by the majority. Moreover, people confined to their broadband-equipped homes for most of the day have little use for mobile data networks. Any additional investment is likely to go into fiber-optic equipment.

5G launches will also be delayed in European markets that have postponed auctions of the spectrum needed to support services. Austria, the Czech Republic, France, Portugal and Spain are all now reported to have delayed auctions. Without spectrum, 5G will obviously not fly.

Fear mongering stories linking 5G to illness could also hinder rollout. Countries such as Belgium and Switzerland have imposed limits on the use of 5G antennas amid lingering concern that radiofrequency emissions are carcinogenic. The World Health Organization says mobile frequencies are too low to be dangerous, but activists are unconvinced.

In the UK, operators now have to contend with the ludicrous suggestion that 5G networks transmit COVID-19. After misinformed tweets by celebrities including Amanda Holden, a British actress and reality-TV regular, 5G masts were burnt in the cities of Belfast, Birmingham and Liverpool.

China, meanwhile, remains determined to erect more than half a million 5G base stations by the end of this year. Claiming to have beaten COVID-19, it has lifted restrictions on the movement of people and reopened its factories. For the equipment makers building those 5G networks, this investment program could be essential medicine. Just last month, China Mobile, the country’s largest operator, awarded 5G contracts worth $5.2 billion. Unfortunately, with almost 90% of the work going to domestic suppliers Huawei and ZTE, Western vendors will not be able to count on China for a boost.

https://www.lightreading.com/5g/5g-is-looking-like-a-casualty-of-covid-19/a/d-id/758804?

 

 

 

 

Huawei confirms position as #1 5G network equipment vendor with 10 key enablers for 5G

Huawei Technologies Co has secured its position as the most sought-after 5G telecom equipment supplier, despite the US government‘s intensified push to contain the Chinese technology giant on the geopolitical, legal and technological front lines.  Among the 91 commercial 5G contracts Huawei has inked, the largest number by any telecom gear maker so far, more than half are from Europe, where Washington has spared no effort to dissuade its allies from using the company in their 5G systems.

Analysts said the steadily growing contracts show that Huawei has won the trust of more foreign telecom operators with its technological prowess, and Washington’s groundless security accusations have failed to convince even some of its closest allies.

Ding Yun, president of Huawei’s carrier business group, said at a launch event in London on February 20th that the company’s 91 commercial 5G contracts is an increase of nearly 30 from last year. That is ahead of the 81 announced by Swedish telecom company Ericsson last week and well ahead of Nokia, which said it had secured 67 5G commercial deals as of Feb 10th. Ding said 47 of its 5G contracts are from Europe, 27 from Asia and 17 from other regions.  Huawei will invest $20 million in innovative 5G applications over the next five years, contributing to a thriving 5G ecosystem and accelerating the commercial success of 5G, officials said.

At the same event that day, Yang Chaobin, President of Huawei 5G Product Line (see photo below), unveiled Huawei’s 10 key enablers for 5G.  Those are the following:

  • #1 Extensive 5G Commercial Experience to Accelerate 5G Scale Deployment
  • #2 Comprehensive Portfolios to Provide Consistent 5G Ultimate Experience.
  • #3 Industry’s Only Ultra-Broadband Solution, Simplifying Network Deployment.
  • #4 Exclusive Blade AAU, All in One for Simplified Deployment.
  • #5 Industry’s First Commercial DSS Solution, Enabling Fast FDD 5G NR Deployment
  • #6 Cutting-Edge Algorithm Enables Leading Network Performance
  • #7 Low Energy Consumption Makes Green 5G
  • #8: E2E NSA/SA Converged Solution for Future Industry Digitalization
  • #9 Unique E2E SUL to Unlock UL Experience and Latency for Industry Needs
  • #10 E2E Network Slicing Solution Facilitates Industry Digitalization

Huawei

Yang Chaobin Unveils Huawei 5G 10 Key Enablers in London

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Mr. Yang Chaobin said, “In the process of mobile communications development, telecom operators have been using greater numbers of antenna units as a solution for insufficient sites and poles. Now they have to deal with insufficient antenna installation space. Huawei’s unique Blade AAU, which prides itself on “ultimate simplicity,” aims to reduce operators’ TCO and investment in hardware and sites.”

According to the latest GSA update, by the end of 2019, 62 telecom operators in 34 countries had officially announced the commercial release of 5G, and 41 of them are supported by Huawei, accounting for two-thirds of the total figure.

In the 5G era, continuous large-bandwidth TDD spectrum is the optimum choice for achieving an ultimate 5G experience. However, a significant number of telecom operators only get discontinuous segments of spectrum due to satellite occupation or discrete allocation. Huawei has launched the industry’s only full series of ultra-broadband solutions, which support a maximum bandwidth of 400 MHz. With just one module, all discrete spectrum within 400 MHz can be used. It saves modules and simplifies site deployment, greatly slashing site rental and hardware cost for telecom operators.

2020 will see large-scale 5G deployment worldwide. Apart from the mainstream 5G deployment on mid-band spectrums, operators can also deploy 5G networks on sub-3 GHz FDD to achieve fast 5G coverage. For new FDD spectrum, Huawei’s suggestion is direct 5G deployment on them to significantly improve the FDD spectral efficiency with NR technologies. It is proven that NR operating at an FDD frequency can deliver an impressive improvement in user experience compared to that of LTE.

For existing FDD spectrum, Huawei’s 1 ms dynamic spectrum sharing (DSS) solution can be adopted. This technology dynamically allocates spectrum resources in milliseconds based on LTE and 5G service and traffic requirements, maximizing spectral efficiency. “In November 2019, Huawei DSS was put into commercial use in Europe. Until now, our customers have 100 million legacy FDD RRUs that can be adapted efficiently to 5G using this solution,” said Yang Chaobin.

“Huawei has undergone extensive R&D, innovation, and commercial adoption in Massive MIMO. We have the most complete product portfolios and state-of-the-art algorithms to keep our Massive MIMO performance unrivalled. In terms of software algorithms, Huawei has MU-MIMO, SRS, full-channel beamforming and more to provide optimal capacity, coverage and user experiences. In 2019, Huawei helped LG U+ in South Korea, EE in the UK, and Sunrise in Switzerland to deploy 5G commercial networks.

In the third-party network performance tests conducted by RootMetrics and Connect, Huawei helped its operators rank No.1 in user experience, with an average downlink rate of 1.5 to 2 times higher than that of competitors’ networks, which further demonstrates Huawei’s superior Massive MIMO performance in actual commercial use,” according to Yang Chaobin.

“Every new generation of mobile communications technologies is developed to offer more applications and a better experience. 5G is no exception. 5G coverage must be good enough to provide excellent experience, and 5G experience must be better than any of the previous generations. Huawei’s products and solutions are committed to carrying forward this mission. 2020 will be a key year for 5G to be put into commercial use on a larger scale. “No one can whistle a symphony, it takes an orchestra to play it.” We hope to work with global partners to continuously carry out technology and application innovations, which utilize 5G as the connection platform, together with AI and Cloud technologies, to jointly build a healthy, viable, and sustainable digital ecosystem,” said Yang Chaobin.

 

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Geo-Political Backdrop for Huawei:

The UK announced on Jan 28 that it would allow Huawei in the noncore part of its 5G network, with a cap of 35 percent market share. A day later, the EU announced its toolbox for 5G deployment, which does not ban Huawei and leaves it up to the member countries to make their final decisions.

French Minister of Economy and Finance Bruno Le Maire confirmed that the government will not exclude Huawei. The same view was expressed by Swedish and Italian officials, though those countries also said there would be security reviews for vendors.

Bai Ming, a senior research fellow at the Chinese Academy of International Trade and Economic Cooperation, said more European countries are taking an unbiased approach toward Huawei because Washington has never provided factual evidence to support its security accusations.  “Challenges only make Huawei stronger,” Wang said.

“More people realized that mixing politics with normal business cooperation could only delay the global deployment of 5G,” Bai said.

But analysts also warned that tougher headwinds are still ahead for the world’s largest telecom equipment maker, given media reports that the US government is planning to further restrict US technology sales to Huawei.

Meanwhile, a federal judge in Texas on Tuesday dismissed a lawsuit filed by Huawei to challenge a 2018 congressional defense bill that stopped federal agencies from doing business with the company.

Wang Yanhui, secretary-general of the Mobile China Alliance, said a broader US ban on technology sales won’t substantially harm Huawei’s telecom business, as it has already shipped US-component-free 5G base stations around the world.

The Shenzhen-based company has also been scrambling to build its own mobile software ecosystem, the foundation for its ability to continue selling smartphones in overseas markets to mitigate the fallout from US restrictions.

 

References:

https://www.prnewswire.com/news-releases/huawei-unveils-10-key-enablers-for-accelerating-global-commercial-adoption-of-5g-301009039.html

 

U.S. government & tech companies to create software standards for 5G telecommunications networks

The White House wants U.S. tech firms to collaborate on one or more 5G infrastructure software standard(s). The plan would build on efforts by some U.S. telecom and technology companies to agree on common engineering standards that would allow 5G software developers to run code on machines that come from nearly any hardware manufacturer.

That would reduce, if not eliminate, reliance on Huawei equipment.according to Larry Kudlow, Director of the National Economic Council.  That would reduce, if not eliminate, reliance on Huawei equipment.  The U.S. contends Huawei has strong links to the Chinese military, making use of its equipment a national-security risk. Huawei has denied such links and says it operates independently of the Chinese government.

The big-picture concept is to have all of the U.S. 5G architecture and infrastructure done by American firms, principally [1],” Larry Kudlow said in an interview with the Wall Street Journal. “That also could include Nokia and Ericsson because they have big U.S. presences.”

Note 1.:  That is highly unlikely to happen, because there are ZERO U.S. firms producing 5G infrastructure.  The only non-Asian 5G infrastructure equipment makers are Nokia and Ericsson- both headquartered in Europe.  5G network operators AT&T and Verizon are working with Cloud Service Providers, Microsoft and Amazon, respectively on integration of mobile edge computing with their 5G networks.

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AT&T, Microsoft and Dell [2] are among the companies working with the administration on the project.  “Dell and Microsoft are now moving very rapidly to develop software and cloud capabilities that will, in fact, replace a lot of the equipment,” Mr. Kudlow said. “To quote Michael Dell, ‘Software is eating the hardware in 5G.’

Note 2.:  None of those companies are now or will in the future make 5G infrastructure.  AT&T is a network operator that purchases 5G infrastructure equipment, Microsoft is primarily a Cloud Service Provider (AZURE), while Dell is an IT infrastructure company that primarily sells to enterprise data center customers.

Kudlow is likely referring to virtualization of the 5G radio access and 5G core networks when he mentioned “software and cloud capabilities that will, in fact, replace a lot of the equipment.”  Yet there’s already a lot of work that’s been done in vRAN and cloud RAN (sometimes referred to as “cloud native radio access networks.”

For open source cellular hardware, there is an OpenRAN project within the O-RAN Alliance, which involves disaggregating a cellular Base Station into its constituent components and defining interfaces between those.  The Open Network Foundation (ONF) is collaborating with the O-RAN Alliance to generate open source software for that project.  There are also several  RAN projects within the Telecom Infrastructure Project (TIP), including OpenRAN, vRAN Fronthaul and OpenRAN 5G NR Base Station.

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White House officials say they are taking the effort seriously because of the potential value of 5G technology to the broader economy. Industry boosters say the new 5G engineering standard will power an “Internet of Things” in which factories, household appliances and vehicles are connected in the way mobile phones are now. They say 5G can do for future tech startups what 4G technology did for smartphone apps like Uber Technologies Inc. and Snapchat Inc., building a foundation for future innovation.

Image result for graph of 5G telecom equipment market share

“Talk is a good start,” said Roger Entner, an analyst for industry researcher Recon Analytics. “But in the end it needs action. More funding will accelerate everything.”

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Similar U.S. government initiatives and proposals:

The effort appears to line up very closely with a new program at the U.S. military’s Defense Advanced Research Projects Agency (DARPA) called “Open Programmable Secure 5G” (OPS-5G)As noted by Data Centre Dynamics, the program promises to “create open source software and systems enabling secure 5G and subsequent mobile networks such as 6G. The signature security advantage of open source software is increased code visibility, meaning that code can be examined, analyzed and audited, either manually or with automated tools. In addition, the portability of open source serves, as a desired side-effect, to decouple the hardware and software ecosystems. This significantly raises the difficulty of a supply-chain attack and eases the introduction of innovative hardware into the market.”

U.S. lawmakers have proposed funding research and development into open 5G software standards. A bipartisan group of senators in January proposed tapping proceeds from the Federal Communications Commission’s coming spectrum license auctions to pay for research grants into those technologies.  The administration is looking into those efforts but hasn’t yet decided whether to back them, Mr. Kudlow said.

If U.S. and European companies work separately, it could take longer to develop world-beating technology. If they work together, it could raise antitrust concerns.  However, Kudlow said he didn’t believe antitrust would be an issue, saying the companies would compete in providing 5G technology. “We’re taking a coordinating role among leading companies,” he said.

He didn’t provide a specific time frame, though others in the government have said they expect to have a system running within 18 months. Earlier, the White House considered subsidizing a new hardware competitor to Huawei or backing a government-owned 5G network but rejected both.

President Trump is squarely behind the effort, said Kudlow, who is leading the initiative as director of the National Economic Council.

“The president kept saying to me, ‘Can’t we just put it (5G) under one simple infrastructure?’” Kudlow said. “We’re trying to create an American soup-to-nuts infrastructure for 5G. He kept hearing that Huawei seems to be able to do it.”

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Huawei’s threat to U.S. and European tech companies:

Paul Triolo, head of global technology policy at the Eurasia Group, a business consulting firm agreed that Huawei has a formidable lead in 5G technology.  “The problem is you’re starting late in the game to fix this problem,” Mr. Triolo said of the U.S. effort. He added that the initiative could also threaten Nokia and Ericsson by making their machines into commodities, Mr. Triolo said.

Perhaps the most insightful proceeding on Huawei and the Chinese threat to 5G in the US is playing out at the FCC, the US government agency charged with oversight of telecom networks. That agency is considering a proposal that would bar the purchase of Huawei equipment among US companies that receive government subsidies for network buildouts in rural areas. The FCC is also evaluating its own rip-and-replace program of existing Huawei equipment in US networks.

However, unlike some of the other Trump administration efforts against Huawei, the FCC’s proceeding is being held in the open, with publicly available comments from all the companies involved in the issue.

Huawei is the world’s largest supplier of wireless networking equipment, yet it generates less than 1% of its revenue from the US market, according to research and consulting firm GlobalData.

Huawei has denied any links to Beijing, but the Chinese government is largely responsible for Huawei’s success due to the immense funding it funneled to the company and the measures it took to block competitors from impeding Huawei’s rise in the China market. As a result, Huawei became a telecom juggernaut not just in China, but all over the world. Now, the US is trying to adopt a similar strategy to promote US firms, and it wants to do so ahead of more widespread rollout of next-gen 5G networks in the coming years.

“If the US wants 5G hardware and software developed by a US or European company, the government should encourage companies to begin negotiations with Huawei to license our 5G technology,” Huawei’s US security lead Andy Purdy told the WSJ. Purdy says that Huawei’s intellectual property is integral to fast 5G deployment, and that without it, “the combined product will be one to two years behind the comparable Huawei products in terms of functionality and assurance.”

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References:

https://www.wsj.com/articles/u-s-pushing-effort-to-develop-5g-alternative-to-huawei-11580831592

https://www.lightreading.com/security/atandt-microsoft-others-get-behind-trumps-anti-huawei-agenda-/d/d-id/757286?

https://www.theverge.com/2020/2/5/21124888/us-5g-huawei-white-house-trump-china-alternative-telecom-standard

U.K. Allows Huawei to Build Non Critical Parts of its 5G Network

Huawei is given permission to build noncritical parts of the network, despite U.S. security concerns:

As widely expected, the UK government today decided to allow Huawei’s network equipment to play a limited role in its national 5G networks. After a security review, the UK’s National Security Council (NSC) made the decision today following a meeting chaired by Prime Minister Boris Johnson.

British officials from senior government departments held a meeting last Wednesday and made the recommendation to allow the world’s #1 network equipment vendor to play a “limited role” in national 5G networks. Today, that recommendation was made final.

Huawei is the leading 5G global network equipment vendor, with relatively few alternative providers — such as the European firms Ericsson and Nokia — none of whom are considered to offer a like-for-like option at this stage.

UK Digital Secretary Baroness Morgan said:

“We want world-class connectivity as soon as possible but this must not be at the expense of our national security. High-risk vendors never have been and never will be in our most sensitive networks.

“The government has reviewed the supply chain for telecoms networks and concluded today it is necessary to have tight restrictions on the presence of high-risk vendors.”

Huawei has been under scrutiny over alleged ties to the Chinese government, an allegation the company has repeatedly denied. The U.S. has urged the UK to ban equipment from the Chinese vendor over national security concerns and American officials issued their British counterparts with a dossier highlighting perceived risks earlier this month.

The UK has always maintained that any decision on Huawei would be evidence-led and based on its own reviews, but the result will nonetheless anger the U.S. which has been pushing for Huawei to be totally banned from 5G networks of allies.

Huawei, and other “high-risk” vendors, will face the following restrictions:

  • Excluded from all safety-related and safety-critical networks in critical national infrastructure.
  • Excluded from security-critical ‘core’ functions, the sensitive part of the network.
  • Excluded from sensitive geographic locations, such as nuclear sites and military bases.
  • Limited to a minority presence of no more than 35 percent in the periphery of the network, known as the access network, which connects devices and equipment to mobile phone masts.

Governing that Huawei has no more than 35 percent presence in the periphery of the overall 5G network is particularly interesting. This restriction ensures that if Huawei’s equipment was later compromised, or deemed too risky, around two-thirds of the UK’s 5G network would remain unaffected.

The UK is  upgrading its wireless network technology for the rollout of 5G.                                           PHOTO: DANNY LAWSON/ZUMA PRESS ………………………………………………………………………………………………………

John Strand of Strand Consult wrote today in a note to subscribers:

  1. The decision relates to the use of Huawei equipment in the United Kingdom. In practice, this means that the May 2018 total ban on ZTE equipment by the UK’s National Cyber Security Centre will continue.
  2. Huawei are now classified as a high risk vendor following the conclusions of the Telecoms Supply Chain Review.
  3. The use of Huawei equipment will be prohibited in core networks. This means that the backbone of UK mobile networks must not contain Huawei equipment. This policy demonstrates that UK authorities recognize the risk of equipment made by entities affiliated with the Chinese government. If Chinese-made equipment was safe, Huawei equipment would not be prohibited from the network core.
  4. The use of Huawei in the radio access network (RAN) will be limited to 35 percent of the active equipment. This limits the amount that Huawei can sell in the UK. It also means that UK operators will have to prioritize network upgrades in the Western part of the country where Huawei equipment is largely deployed.  In practical terms, it will not be possible for an operator to use Huawei for more than 35 percent of the equipment and then use another Chinese or Huawei-white labeled product for the rest of the network, or a portion thereof. The goal of the policy is to limit equipment from Chinese owned and/or affiliated entities, even if it is not explicitly written.
  5. The use of Huawei equipment will be expressly prohibited in sensitive geographical areas in the UK, areas selected for national security reasons. Indeed, this is already practiced in France where Huawei equipment in restricted in Toulouse, home of Airbus and the European aerospace industry. A similar policy exists for Brest where French nuclear submarines are located. Read more about the French decision.

Overall, the UK policy will send a strong signal to the rest of Europe and the world that the use of Chinese equipment poses a security risk and should be limited. The UK and French decisions were developed to protect industries, institutions, and assets of national importance in specific geographical areas.

The U.S. model restricts its military from using Huawei and ZTE, regardless of location. Moreover, the Federal Communications Commission prohibits the use of its subsidies for the purchase of Huawei and ZTE equipment and is considering the requirement of removal of Huawei equipment for future subsidies.

Additional US policy restricts American firms from transacting business with Huawei for sensitive technologies. US telecom operators, noting the risk, have largely opted not for Huawei or ZTE, outside of a few exceptions. This is explained in Strand Consult’s research note The pressure to restrict Huawei from telecom networks is not driven by governments, but the many companies that have experienced hacking, IP theft, or espionage.

The UK new policy is a step in the right direction, and it underscores the need for greater scrutiny of technology from firms owned and/or affiliated with the Chinese government. The security risks are real and networks are key vulnerability. Indeed, scrutiny should extend beyond the network equipment to other vulnerable products and services; systems can be compromised by devices attached to networks as well as from software running over it. See Strand Consult’s research note “The debate about network security is more complex than Huawei. Look at Lenovo laptops and servers and the many other devices connected to the internet.”

Strand Consult expects that the security standards required for public safety networks will be strengthened and translated to commercial telecom networks. It is likely that some UK operators will claim that the new policy will be unduly expensive. Strand Consult examines such claims in the report ”The real cost to rip and replace Chinese equipment from telecom networks.”

Notably 2G / 3G / 4G equipment must be replaced anyway in the move toward 5G. Huawei is not the only vendor, and alternatives are price competitive. Moreover, when it comes to 5G, network rollout policy is far more consequential than the choice of equipment vendor. The view that Huawei is necessary for 5G is a myth; indeed, the US has taken a leadership position on 5G without using Huawei equipment.

Looking at the historical facts, it is not difficult to find operators which have swapped their networks with a new supplier. This need not come as a premium for shareholders. Strand Consult reviews the financial data and case studies from the major network swap it observed in 2010 – 2016.

The UK government, with Boris Johnson at the forefront, can improve the prospects for 5G in a meaningful way. In the UK, as in many other countries, it is both difficult and expensive to build mobile infrastructure. Strand Consult’s analysis show that the terms and costs associated with obtaining permits and leasing land for mobile masts and towers is artificially expensive. In the UK, operators have for many years and with limited success tried to change the terms.

In Denmark, on the other hand, Strand Consult has helped to create transparency so that authorities get the information they need to create the needed rollout policies. As a result,  the total rental costs for mobile operators have fallen by over 20 percent, and it has become significantly cheaper and easier to upgrade and build existing and new mobile infrastructure. Learn more about the project here ”How to deploy 5G: Best practices for infrastructure, regulation and business models.”

Huawei will likely claim that the UK decision doesn’t hurt its prospects. This is probably to save face. The fact is that Huawei will be subject to increased restriction and will not be able to enlarge its market share. Moreover, there is no change on the ZTE ban. The UK makes clear that Chinese equipment is not allowed in the core network. Moreover, when it comes to RAN, there are also strict limitations.

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In September 2018, a Canadian official argued that allowing Huawei to operate improves security. If a specific vendor’s equipment is compromised, having others in operation means less of the overall network is affected.

While Huawei will be breathing a sigh of relief at the UK’s decision – so will the country’s providers. In a statement, BT wrote:

“This decision is an important clarification for the industry. The security of our networks is an absolute priority for BT, and we already have a long-standing principle not to use Huawei in our core networks. While we have prepared for a range of scenarios, we need to further analyse the details and implications of this decision before taking a view of potential costs and impacts.”

All four of the UK’s major operators had already begun deploying 5G equipment from Huawei. Stripping Huawei’s gear and buying and installing replacements would have been costly and time-consuming.

Andrew Stark, cybersecurity director at Red Mosquito, said:

“With Huawei kit already integral to the UK 3G and 4G networks, shifting to 5G with them offers the path of least resistance and increases chances of telecom companies meeting tight roll-out targets. There are currently only two other tech players capable of providing hardware for 5G, namely Nokia and Ericsson.”

The UK says its decision was made after the NCSC “carried out a technical and security analysis that offers the most detailed assessment in the world of what is needed to protect the UK’s digital infrastructure.”

However, not all of the UK government will be so welcoming of today’s news. Conservative MP Bob Seely recently said “to all intents and purposes [Huawei] is part of the Chinese state” and involving the company would be “to allow China and its agencies access to our network.”

While UK intelligence officials clearly decided the benefits outweigh the risks, several concerns have been raised about Huawei’s equipment in recent years.

The dedicated Huawei Cyber Security Evaluation Centre (HCSEC) reported in 2018 that it could no longer offer assurance that the risks posed by the use of Huawei’s equipment could be mitigated following the “identification of shortcomings in Huawei’s engineering processes”. Concerns were raised about technical issues limiting security researchers’ ability to check internal product code and the sourcing of components from outside suppliers which are used in Huawei’s products.

follow-up report from HCSEC in March 2019 slammed Huawei as being slow to address concerns and claimed that “no material progress has been made by Huawei in the remediation of the issues reported last year, making it inappropriate to change the level of assurance from last year or to make any comment on potential future levels of assurance.”

Just a month earlier, the Royal United Services Institute (RUSI) – the world’s oldest independent think tank on international defence and security – warned about the use of Huawei equipment: “It is far easier to place a hidden backdoor inside a system than it is to find one,

“In the likely, but unacknowledged, battle between Chinese cyber attackers and the UK’s Huawei Cyber Security Evaluation Centre, the advantage and overwhelming resources lie with the former.”

The UK’s approach to Huawei has been decided, but it doesn’t feel like the end of the debate.

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References:

https://www.telecomstechnews.com/news/2020/jan/28/huawei-reprieve-uk-government-permits-5g-gear/

https://techcrunch.com/2020/01/28/uk-will-allow-huawei-to-supply-5g-with-tight-restrictions/

https://www.wsj.com/articles/u-k-allows-huawei-to-build-parts-of-5g-network-11580213316

At long last: India Telecom Minister gives go ahead for 5G trials

India’s telecom minister has met with the major mobile network operators and invited them to start testing their 5G services. The government also confirmed that Chinese network infrastructure equipment vendors Huawei and ZTE would be allowed to participate in the trials.

The meeting was chaired by telecom secretary Anshu Prakash and was attended by senior representatives of Bharti Airtel, Vodafone Idea, Reliance Jio and all equipment vendors, including Huawei, reports Live Mint.  Indian television channel CNBC-TV18 reported the news first, citing a senior official. The trials will be held in January, according to the official, the channel reported.

India’s department of telecom expects to allocate spectrum soon (we’ve heard that before?) for trials, which should begin in Q1-2020, ahead of plans for a spectrum auction no later than April 2020.

India Telecom Minister Ravi Shankar Prasad said earlier that 5G spectrum for trials would be available to all wireless network equipment (base station) vendors.  In particular, he told reporters in India earlier this week:

“5G trials will be done with all vendors and operators.  We have taken an in-principle decision to give 5G spectrum for trials.” On being asked specifically about Huawei, Prasad said that at this stage, all vendors are invited.

                              India Telecom Minister Ravi Shankar Prasad

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The Indian government believes the trials, which were originally supposed to be held in 2019, will help in the development of the country’s 5G ecosystem. The Indian telcos will be conducting 5G tests with different vendors: Bharti Airtel plans to conduct trials with Nokia, Huawei and Ericsson, while Vodafone Idea wants to partner with Ericsson and Huawei. Reliance Jio, which currently works primarily with Samsung, has applied to conduct 5G tests with the South Korean vendor.

With many nations already on 5G, industry divided over trials

A senior executive at one vendor said the trials should have begun a year ago and now that global testing is over, it does not make sense to start from scratch in India, especially with the auction of 5G airwaves slated for March-April.

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India’s telcos have been asking for clarity from the government regarding the participation of both Chinese vendors in 5G activities. Initially only a handful of vendors, including Cisco, Ericsson, NEC, Nokia and Samsung, received invitations to participate in the 5G trials.

The decision was welcomed by Huawei India in a statement, as well as comments from the Chinese ambassador in India on Twitter. Huawei is already active in the country, where it has deployed 4G networks for Bharti Airtel and Vodafone Idea.

The inclusion in India’s 5G trials is of particular significance for Huawei, which faces trading restrictions in several countries, including Australia, New Zealand and the US, because of security concerns. The US has been lobbying the Indian government to exclude Huawei from the 5G market but, equally, China has been lobbying for Huawei and ZTE to be given equal opportunities in India’s 5G market.

The efforts of the US authorities to restrict Huawei’s business had an impact on the vendor’s sales in 2019, though with expected full-year revenues of almost $122 billion it is still by far the largest supplier of telecoms infrastructure globally and the number two player in the smartphone market.

During the past few years, Chinese vendors have provided crucial support to India’s service providers as they attempted to manage their costs and keep tariffs under control. Chinese network equipment is cheaper than the equivalent offerings from Western rivals, enabling traditional telcos to offer services in a market with one of the lowest average revenue per user (ARPU) figures in the world.

The exclusion of Huawei and ZTE from forthcoming 5G deals would almost certainly result in an increase in capital expenditure by India’s telcos: Sunil Bharti Mittal, the chairman of Bharti Enterprises, the parent company of Airtel, spoke out in support of Huawei during a recent event organized by World Economic Forum, stating that Huawei’s equipment was superior to that of its main European rivals, Ericsson and Nokia.

“Glad to know all players got equal chance to participate in 5G trial in India. A welcome move conducive to initiatives like Digital India,” said Chinese Ambassador Sun Weidong in a social media message.

References:

https://www.livemint.com/industry/telecom/huawei-gets-indian-government-s-nod-to-participate-in-5g-trials-11577714552296.html

https://economictimes.indiatimes.com/industry/telecom/telecom-news/govt-will-give-5g-spectrum-for-trials-to-all-players-prasad/articleshow/73033442.cms

https://telecom.economictimes.indiatimes.com/news/with-many-nations-already-on-5g-industry-divided-over-trials/73077911

https://www.telecompaper.com/news/india-ready-to-start-5g-trials-allows-huawei-to-participate–1321471

https://www.lightreading.com/asia-pacific/huawei-zte-get-green-light-from-indian-authorities-for-5g-trials-/d/d-id/756499?

 

Huawei’s Revenue Hits Record $122 Billion in 2019 Despite U.S. Ban

By Dan Strumpf, Wall Street Journal

What ban? Huawei Technologies said its revenue rose to a record $122 billion this year, showing the Chinese tech giant’s continued rise despite the Trump administration’s campaign to curtail its global business.

The pace of growth was slightly slower than expected, said Eric Xu, Huawei’s chairman, predicting more challenges in 2020 and saying the company doesn’t expect to be removed from a U.S. blacklist that has cut it off from certain U.S. technologies.

“We won’t grow as rapidly as we did in the first half of 2019, growth that continued throughout the year owing to sheer momentum in the market,” Mr. Xu said in a New Year’s message to employees titled “Forging Ahead to Survive and Thrive.”

“It’s going to be a difficult year for us,” Mr. Xu continued. ”We will have nothing to rely on but the hard work of our people as well as the ongoing trust and support of our customers and partners.”

Huawei has toughed out one of its trickiest years in its 32-year history. In the past year, U.S. officials handed down a pair of criminal indictments of the company, added Huawei to the Commerce Department’s trade blacklist, and placed new restrictions on its ability to sell to small American carriers. It also pressured allies to exclude Huawei from 5G network rollouts.

Huawei’s finance chief, Meng Wanzhou, remains under house arrest in Vancouver more than a year after her initial detention, as she continues to fight a U.S. extradition request on charges of evading sanctions on Iran. Ms. Meng and Huawei have denied wrongdoing.

Despite those obstacles, Mr. Xu said revenue grew roughly 18% in 2019 to more than 850 billion yuan, or about $122 billion. The unaudited figure was lower than the company initially projected for the year, he said, and was a slowdown from the 19.5% revenue jump recorded in 2018—though exceeded its 2017 growth clip.

Huawei didn’t break out its 2019 revenue by region, but in past years about half of its revenue came from China, while the rest came from Europe and other overseas markets. The U.S. accounts for a tiny share of its revenue.

Huawei shipped 240 million smartphones this year, Mr. Xu said, a 17% increase over 2018 shipments. The company is continuing to invest in other gadgets, including PCs, tablets and wearable devices, he said.

Several U.S. administrations have long suspected that Huawei’s telecom equipment could be used by Beijing to eavesdrop on communications, a charge that Huawei—the world’s largest maker of such gear—repeatedly denies. Huawei gear is effectively off-limits to major American telecom operators, though it is widely used in much of the rest of the world.

A major reason for Huawei’s growth this year has been the company’s ability to withstand being added to the Commerce Department’s “entity list” in May. The listing prevents companies from selling U.S.-sourced technology to Huawei without a license, threatening Huawei’s access to many critical chip and software suppliers.

However, the measure proved less potent than expected. Many American companies assemble chips overseas, allowing them to continue selling to Huawei. At the same time, Huawei turned to alternate sources—including its in-house chip supplier, HiSilicon—for many components. The company now is capable of building 5G equipment entirely free of any U.S. parts.

Its smartphone business continues to grow sharply in its home market of China, and the company has dozens of 5G contracts around the world. So far, Australia and New Zealand have followed the U.S. in blocking Huawei from their 5G networks. In October, German authorities signaled that they won’t exclude Huawei, while a final decision is pending in Canada and the U.K.

Huawei’s CEO and founder, Ren Zhengfei, gave a series of interviews this year boasting of the company’s ability to survive without the U.S. In an interview in November, he told The Wall Street Journal: “We can survive very well without the U.S.”

“Huawei has a fighting culture where aggressive goals are set and with the whole company committed to win,” said Handel Jones, CEO of International Business Strategies Inc., a consulting firm.

One risk to Huawei in the coming year is a slowdown in the adoption of 5G technology, Mr. Jones said. Another is whether its formidable smartphone business can continue to grow in markets outside of China.

Under the entity listing, Huawei remains cut off from selling new smartphones with Google’s suite of Android apps, including the Play app store, Google Maps and other software Western smartphone users take for granted. Mr. Jones said he expects Huawei to ship between 250 million and 260 million smartphones in 2020.

Relief could come in the form of a trade deal between the U.S. and China that makes allowances for Huawei, such as additional Commerce Department licenses. A victory for Ms. Meng in her extradition fight would be met with triumph inside the company. However, Mr. Xu, in his New Year’s note, signaled that the company is keeping expectations in check.

“Survival will be our first priority,” he said.

Write to Dan Strumpf at daniel.strumpf@wsj.com

https://www.wsj.com/articles/huaweis-revenue-hits-record-122-billion-in-2019-despite-u-s-campaign-11577754021?mod=djemalertNEWS

 

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