Huawei is one of China’s most successful global companies.
Its technology is used in more than 170 countries
and its smartphones rival Samsung and Apple for market share.
But some countries, including the United States, have expressed concerns that the Chinese government
could use Huawei’s phones and equipment for spying.
That’s on top of allegations like stealing trade secrets and bank fraud.
Now Huawei’s future is under threat as it finds itself in the eye of a geopolitical storm.
Huawei, which can be translated to mean “splendid act” or “China is able,”
was founded in 1987, in the southern Chinese city of Shenzhen.
Its founder and CEO is Ren Zhengfei, a former officer and engineer in the Chinese People’s Liberation Army.
Back then, it was a scrappy upstart, selling telephone switches produced by another company in Hong Kong.
In the 1990s, it started doing its own research and toward the end of the millennium,
opened several research centers globally.
Following that research, Huawei became capable of developing its own products,
which were sometimes up to 25% cheaper than its competitors.
And it began to expand its reach worldwide.
Today, Huawei is probably best known for being one of the world’s biggest smartphone makers,
alongside Samsung and Apple.
It’s also the globe’s largest provider of telecommunications equipment.
It has built more than 1,500 networks worldwide, connecting a third of the planet’s population.
Huawei employs around 180,000 people and says its revenue for 2018 was about $107 billion.
But amid all its commercial success, the company has been dogged by allegations of breaking laws for profit.
Controversy has followed Huawei as far back as 2003 when Cisco systems sued the Chinese company
for infringing on numerous patents and illegally copying some software code.
However, the lawsuit was eventually dropped.
Then following an investigation in 2012, U.S. lawmakers warned telecom operators against
doing business with Huawei and its rival ZTE, citing long-term security risks associated
with the companies’ equipment and services.
At the start of 2018, U.S. telecom conglomerate AT&T suddenly dropped a deal to sell Huawei’s
new Mate 10 Pro after lawmakers once again expressed concerns
about Chinese companies in the U.S. telecoms industry.
...China attempts to steal our private data.
A month later, six top U.S. intelligence chiefs warned American citizens
against using products and services by Huawei and ZTE, with the FBI saying:
Huawei says Beijing has no ownership stake or control over the company and that it would
never hand over data to the Chinese government, nor has it ever been asked to do so.
Still, experts have been skeptical about those assurances, pointing to Chinese laws that allegedly
mean that every domestic company is legally mandated to assist the country in intelligence gathering.
It's also thought they're forbidden from talking about any intelligence work.
Experts say these laws mean the company would have no choice
but to hand over data to the Chinese government if it asked for it.
Another point of contention for the U.S. government has been the alleged violation of American sanctions.
Huawei’s rival ZTE nearly collapsed after being hit with a U.S. ban in April 2018,
for violating U.S. sanctions to Iran and North Korea.
That was only lifted after the company paid a $1 billion fine and allowed U.S. enforcement
officers unfettered access to monitor the company’s actions.
Then in December, Meng Wanzhou, Huawei’s CFO
and daughter of its billionaire founder, was arrested in Canada.
That was done at the request of the U.S. government, which made a formal request for her extradition
over alleged violations of U.S. sanctions against Iran.
Just hours before Meng's arrest, U.S. President Donald Trump and his Chinese counterpart XiJinping
had agreed to a 90-day pause in launching new tariffs in their ongoing trade war.
The timing of her arrest led to accusations in China that it was politically motivated,
and part of a larger witch hunt against Chinese companies.
Things escalated from there.
At the start of this year Congress introduced a bill that would, if passed, systematically
ban U.S. companies from selling technology to any Chinese firm
found to have violated export controls or sanctions.
A few weeks later, Huawei and several of its affiliates were hit with 23 charges from the U.S. government,
including bank fraud, stealing corporate secrets, obstructing justice and yes,
violating U.S. sanctions on Iran.
The Chinese company relies on American chip providers like Intel and Qualcomm.
And while it’s still eager to slash its dependence on them,
being cut off from those technologies would still be a major blow.
But it’s 5G, the super fast network that's being designed to support the next generation of the internet,
that may play a decisive role in Chinese tech’s future relationship,
not just with the U.S., but also the rest of the world.
That’s because Huawei is among the top corporate 5G developers.
Huawei has poured more than a billion dollars into 5G research and patenting key technologies.
And it’s paid off.
As of February 2019, Huawei held the most standard essential patents in 5G.
So why are patents so important?
Well, in the future, any sector with a reliance on connectivity, like transport or energy,
will need to pay 5G patent royalties.
That means a company with a lot of patents, like Huawei,
has significant control over the future development of the network.
Huawei has also contributed the most to the development of the 5G standard,
according to market intelligence platform IPlytics.
Huawei’s place at the forefront of the technology poses problems for countries
that see the company as a threat to national security.
Australia, New Zealand and Japan have joined the U.S. in banning Huawei’s 5G equipment
from entering their respective countries in a bid to defend against intelligence leaks and cyber attacks.
This has impacted companies using Huawei equipment to develop 5G Networks.
For example, Australian company TPG Telecom had to abandon its plans
of developing a 5G mobile network using Huawei-supplied equipment.
The Chinese government and media outlets claimed that the U.S.
was lashing out at Huawei to hurt the growing business.
And one of Huawei’s top bosses has accused the U.S.
of having a “loser’s attitude” because it couldn’t complete.
The company warns cutting it out of the race will slow 5G’s roll out and increase costs,
but governments have pushed back, saying they can’t put a price on the security of their nations.
As countries barrel toward 5G technology, expect Huawei to continue making headlines worldwide.
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