Categories: MobilityNetworks

Buying Huawei: A wolf in sheep’s clothing?

The frankly astonishing news that Huawei would, for a one-time fee, grant “perpetual access to Huawei’s existing 5G patents, licences, code, technical blueprints and production know-how,” is either a masterstroke to quash the very vocal concerns the US has had about the security of Huawei’s 5G technology, or a desperate attempt to bolster the company’s faltering bottom line.

Ren Zhengfei made the offer during an interview he gave with the Economist. So, let’s try and unpack what was said, what the offer actually is, and whether any company in the West would seriously consider buying Huawei’s 5G stack.

The key problem that the US has with Huawei’s 5G technology is their lack of control. The US Government may shout about the security aspects of Huawei’s 5G technology, but the objections are really about the lack of control the US would have on how 5G technologies would be developed. Add to this mixture a distrust of the Chinese government and, you have a heady mix that is ripe for presidential Twitterdom.

Your level of paranoia will govern whether you think every piece of 5G hardware Huawei sells has backdoors that the Chinese government can use or allow them to eavesdrop on conversations. The American’s, of course, use the national security angle as a weapon to silence anyone that would argue that Huawei is little more than a tech giant that builds great hardware, we all want to buy. What’s certain is the surprise offer from Huawei won’t be embraced by any company in the West without some careful consideration of the long-term impact buying Huawei’s stack could have on the long-term future of their company.

A new way to do business?

Creating a rival for its key technology at the level Huawei’s is suggesting is unprecedented, yet other businesses have either had to give their intellectual property away or, taken a stance that is generally counter to good business: AT&T and its UNIX operating system in the 1970s is a good example. Google has famously done rather well by making its Android operating system (OS) Open Source, and Tesla, with founder Elon Musk stating he: “will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”

However, could this move by Huawei be little more than an attempt to protect its future profitability in a mobile market that is about to explode once again as 5G ushers in a new age of connectivity? And Huawei is about to release their own OS, which they hope will rival Android. There is more hope than substance, as users still won’t be able to use many of their favourite apps when the latest Huawei handsets are launched.

Don’t forget, the current block on US firms selling technology to Huawei includes Apps from Google. Huawei smartphones might use the Open Source Android OS, but their Apps are banned from export due to the US’s arguments that this technology could be a national security issue. So, Huawei’s 5G handsets wouldn’t have YouTube or Gmail for instance. Is Mr. Zhengfei’s offer a backhanded way to get this ban lifted? As the Economist points out, 50% of Huawei sales came from selling its smartphones. All eyes are on how Huawei’s new Mate 30 performs in the marketplace.

Speaking to Silicon, Stewart Randall, Head of Electronics Group, Intralink China said: “Huawei’s code wouldn’t come cheap, so only a company of a certain size could afford it. But, given the US political climate, I expect there would be a significant political — and maybe even public — backlash against Google for instance, buying it. I also don’t think buying from Huawei would help Google’s lobbying efforts. While they could say, “Look, we have the source code, there are no backdoors — it’s fine, so let us sell to Huawei again,” the US government may well just see Google helping its adversary look good on the international stage and making a large chunk of cash.”

Who would buy Huawei?

If a Western company were to take Mr Zhengfei up on his offer, some observers have stated that this could level the playing field for 5G and allow others to enter a marketplace that is currently dominated by Huawei itself.

Huawei would under the deal be able to continue its own R&D and sell 5G products, but more competition is good isn’t it? But Huawei could be playing with fire, with whoever buys their IP eventually beating them in a marketplace they basically own at the moment.

The question of standards also raises its head. If 5G is to deliver the revolution in communications is promises, all of the associated hardware must have high levels of interoperability. Being able to buy hardware off-the-shelf without any compatibility worries is the goal of the OpenRAN organisation. But guess what? Huawei has yet to join.

Perhaps the incumbents across the telecommunications sector might not be interested or, have deep enough pockets to buy Huawei. Perhaps a potential buyer might be a new start-up. Having Huawei’s IP stack as the foundation of their business would give that company several years’ head start, just as we enter the era of 5G.

If Mr Zhengfei was taken up, it’s more realistically to be with a coalition of tech companies. Perhaps the only one that would have deep enough pockets would be Apple. But they aren’t going to aid the development of a rival operating system. It’s a shame they don’t make telecoms hardware. But if they did and, used some of their cash mountain to buy the Huawei stack, 5G would disappear into their walled garden, as Apple doesn’t play well with others.

Who owns our 5G future?

This year’s Mobile World Congress in Shanghai was telling, not because the main players including Huawei were there in force, but the growing number of smaller players was highly conspicuous. Hardware such as 5G base stations needs essential components often from US suppliers, who make healthy profits selling these components – something the US government seems to have omitted to mention when talking about how Huawei poses a security threat, but perhaps, not an economic one.

Huawei may be a one-stop-shop for 5G tech, but the other suppliers depend on either Intel or Xilinx supplying them with FPGAs – field-programmable gate arrays. Is the rest of the telecoms industry really that far behind Huawei in developing their own 5G technology?

Intralink’s Stewart Randall thinks not: “No, the rest of the industry is not that far behind. Ericsson and Nokia already have such technology. FPGA-based products all rely on Intel and Xilinx right now. Forward error correction technology is also something we’ll increasingly hear about — as is Huawei’s Polar code tech — but there are companies in the West with this technology, including our client, UK-based semiconductor IP firm AccelerComm. If Huawei now loses access to some US IP, the company could still make 5G ASICs, but I suspect its future ASIC designs will become inferior to their foreign counterparts.”

There is no doubt that 5G will revolutionise communications as we know it. However, can this boycott last? Support for the US has been limited. Only the UAE has stated it will push ahead with its 5G deployment using technology supplied by Huawei. All US allies including the UK are in a process of evaluating the security risks that Huawei hardware could pose.

And whether a company in the West is taking a long look at its bank balance wondering if it could afford Huawei’s asking price remains to be seen. What is certain is that the future of 5G is in flux. And whether the US softens its stance could ultimately determine who has the keys to the 5G kingdom.

David Howell

Dave Howell is a freelance journalist and writer. His work has appeared across the national press and in industry-leading magazines and websites. He specialises in technology and business. Read more about Dave on his website: Nexus Publishing.

Recent Posts

Amazon Alexa Recovers After Morning Outage

Alexa wake up alarm didn't work this morning? Smart lights didn't turn on? Outage of…

3 days ago

UK, Australia Reach Cyber, Critical Tech Agreement

Australia says it will 'fight back' against nation state cyberattacks, after agreements with the UK…

3 days ago

Italian Regulator Recalculates Apple, Amazon Fines

Italian regulator admits it has redetermined the fines against Apple and Amazon, over the sale…

3 days ago

Red Cross ‘Appalled’ As Hackers Steal Humanitarian Data Of 515,000 People

A new low. International Committee of the Red Cross shuts down reunification system, after hackers…

4 days ago

Russia Proposes Ban On Cryptocurrencies, Crypto Mining

Russia's central bank has this week proposed the banning on the use and mining of…

4 days ago