Can Huawei Survive The Ban?

Ren Zhenfei has called Huawei’s current situation a life or death scenario. Huawei might be dominant in China, but if it intends to maintain its legacy in the world, it needs to spar smartly with an age-old veteran like America. Perhaps, it is this willingness to spar that has served Huawei a bitter pill to swallow. The United States has never shied away from declaring China a global cheat. In the eyes of people who insinuate such things, any company, be it Huawei or ZTE, carries the same tag. And so Washington has been looking for ways to penalize Beijing for its “sins,” even if it might affect more than a billion people in 170 countries.

The Entity List

The US-China trade serves an important backdrop to recent events involving Huawei. In 2018, the Trump administration started imposing a series of tariffs on US imports from China. As was expected, China retaliated with cuts of her own, leading to a full-blown war that would leave many casualties in the tech world. But the trade war didn’t stop there.

Trump signed the National Defense Authorization Act (NDAA) in August 2018, practically banning US companies from patronizing telecoms devices from foreign companies considered a threat to the United States. The move was meant to “prohibit transactions posing an unacceptable risk to national security.” Though Huawei was not directly mentioned in the executive order, it was mentioned on the Entity List created by the Bureau of Industry and Security. US companies needed to receive permission before trading with companies on that list. The move effectively stopped companies like Google, Microsoft, Apple, Intel, and others from selling vital software and parts to the Chinese tech giant.

As part of NDAA, institutions and universities that received federal funding were banned from using devices manufactured by companies like Huawei, ZTE, Hytera, Hikvision, and Dahua Technology. Massachusetts Institute of Technology and institutions at the University of California quickly cut ties with Huawei for fear of losing revenues from the Trump administration.

It wasn’t enough; the US government put up a charm offensive in the weeks and months following its decree, advising its allies of the supposed dangers that Huawei posed through its ties with Beijing. In certain places, the US threatened to pull out if Huawei tech was involved in some of the infrastructure. Speaking to Fox Business earlier this year, Secretary of State, Mike Pompeo, said, “If a country adopts this [Huawei] and puts it in some of their critical information systems, we won’t be able to share information with them, we won’t be able to work alongside them.” His statement came after a week of meeting leaders in Belgium, Iceland, Hungary, Poland, and Slovakia. The US Secretary of State further clarified that America would think twice before citing embassies, military posts, or other American resources in areas that used 5G network from China’s Huawei.

The message from Washington has been very clear: Huawei has close ties with Beijing; if Beijing wished it, Huawei would be inclined to add a backdoor into their 5G network, allowing the Chinese government illegal access to sensitive information. In a world rife with state-sponsored cyberattacks, the implications were not lost on many.

Some countries heeded the American cry and carved China’s Huawei out of their future. Australia, New Zealand, and Japan have all cut the Chinese tech company out of their 5G networks. Firms like BT have decided to use Huawei only in non-core areas of their networks. It means that though Huawei kits would be used, it would only be in peripheral parts of the network. Both the UK and German governments have tried to avoid putting an outright ban on Huawei due to its effect on their abilities to fully implement 5G technology. Jochen Homann, the head of the federal network agency in Germany said, “If Huawei were excluded from the market, this would delay the rollout of the digital networks.” UK has deferred its decision on whether or not to ban Huawei to later in 2019, according to reports.

The Global Effect

Due to the blacklist, users of Huawei devices would soon not be able to use Google applications on their phones. Apps like Google Map, YouTube, Gmail, and Duo would no longer come pre-installed on Huawei devices. Even worse for users is the fact that Google would not be able to license the Android OS to the Shenzhen-based company. The same applies to computers that require the Windows OS. The only way the reverse would be possible was if the US department of commerce issued licenses; from what has been covered in the news, this doesn’t look like happening any time soon.

The repercussions are far-reaching. Huawei is the second-largest smartphone manufacturer in the world per 2019 second quarter reports, behind Samsung and ahead of Apple. With a product range that spans high-end, luxury devices as well as cheaper android phones, users of Huawei cut across all income levels. Being cut off from Google Mobile Services like YouTube and Gmail could have a serious ripple effect on the company’s finances.

Interestingly, though, Huawei hasn’t been idle. How it is responding and what it is doing shows the Chinese firm might have had plans far in advance of the situation turning sour.

The 5G Debate

“If 4G tech built us a road, then 5G tech will build a city,” Wang Xiaoyun of China Mobile said in an interview. With a rise in the adoption of artificial intelligence, faster internet connectivity is a prerequisite. Algorithms can make swifter decisions if information from an electric car arrives much earlier than before. The key to increasing transmission speed is to cut down on losses during the communication process.

5G is able to do this because it tackles interference by using two sets of codes for data transmission. Its “polar codes” make for longer battery life, a feature sorely lacking in most other networks around the world. Polar codes were pioneered by Turkish Professor Dr Erdal Arikan through his partnership with the China’s Huawei. Unlike low-density parity check, LDPC, polar codes allow for maximum data transfer with “zero error at a particular bandwidth.”

Huawei has been developing 5G for the past ten years, according to this Forbes report. This puts the Chinese company ahead of its counterparts in the west where they lack a specialist in building 5G infrastructure. It’s this dominant position that Huawei thinks threatens the US. For this reason, Ren Zhengfei, founder of Huawei has offered to license their know-how to western companies.

“[Huawei is] open to sharing our 5G technologies and techniques with US companies, so that they can build up their own 5G industry,” Ren Zhengfei is quoted by the BBC in an interview with the NYT. It is not clear what effect this would have with the Trump administration. A positive outcome would see a middle ground where both countries share technology and the source codes of each device are investigated by a neutral organisation.

The Rebound

As soon as it became clear that Huawei would lose access to the Android OS, rumours began to swell that the Chinese firm already had its own operating system in the works. It didn’t take long for the truth to come to light either. In August 2019, Huawei announced its new operating system called, HarmonyOS. The microkernel-based OS known in China as Hongmeng, “can be used in everything from smartphones to smart speakers, wearables, and in-vehicle systems to create a shared ecosystem across devices,” The Verge said on the matter.

To ensure that it was open to more devices and that more manufacturers could use the operating system, HarmonyOS has been released as an open-source platform. Being open-source meant the original source code was open for redistribution and modification by developers around the world. The more accessible this source code was to the public, the easier it was for developers to adapt the codes and create variants as well as applications that would run smoothly on HarmonyOS-powered devices.

Huawei has been careful in deploying HarmonyOS on its devices. The first device to sport HarmonyOS is the Huawei Vision TV, multiple outlets announced. Meanwhile, the new Huawei Mate 30 and Mate 30 Pro that have just been unveiled will only run on an open-source version of Android. While the smartphones will not come pre-installed with Facebook, Instagram, and WhatsApp, users can still download them from respective app stores. Other apps like YouTube will only be accessible via a web browser. A spokesperson for Huawei said users could be taught how to “side load” Google’s apps on the new devices at stores around the world. At the same time, Huawei has set aside a whopping $1 billion to help developers build apps that would run on this version of Android.

This new range of smartphones seems a defiant fist in the face of Trump’s Entity List. Huawei seems to have managed to build a smartphone that beats both rivals in functionality, to hear them say it. “This is the best-performing smartphone in the world,” Richard Yu, Chief Salesman, boasted at the launch of the devices in Munich. The Mate 30 Pro has a larger display than the iPhone 11 Pro Max, for example. The Huawei Mate 30 Pro 5G will ship to Europe at a price of €1,199 ($1,320), while the 4G version comes a €100 cheaper. Meanwhile, the Samsung Galaxy S10 5G will be sold at $1,299.

The stakes are high for China’s Huawei, though. The Chinese company is relying on its sleek design and on loyalty to boost sales. Without Google apps like YouTube and Gmail, however, observers fear these devices might be too expensive. “Huawei has Apple soundly beaten when it comes to form factor design but even these beautiful-looking devices are going to struggle to see any volume without the Google ecosystem,” an analyst said ahead of the event in Munich.

What it Means, Eventually

Microsoft president, Brad Smith, echoed one important problem with the Huawei ban: its impact on research. As researchers in America and other allied countries are cut from Huawei funding, they stand the risks of losing ground on other institutions around the world. Researchers provide solutions to many of the world’s problems. Because of how expensive this process is, it is critical that institutions have access to funds that gives them the freedom to experiment and iterate in order to come out with more efficient solutions.

Mr Smith said, “We would worry if we can no longer bring together researchers at Cambridge University or the west coast of the United States or Beijing or Bangalore. That’s where we’re going to continue to find the solutions that the world needs. So yes, we are worried if we can’t step back and have countries strike the right balance.”

Meanwhile, the second-biggest smartphone manufacturer has reiterated its support for researchers around the world. William Xu, head of strategic research at the tech giant, said China’s Huawei would continue to offer at least $300 million in research funding each year. “This amount is only going to increase, not decrease from now on,” William Xu added. This means institutions in the United States and other countries towing this line would be left with few options unless their governments cough up the funds.

Conclusion

Huawei is one of the most important companies in the world. Over the past decade, it has risen from a giant in China to dominate players in the global telecoms industry. The current stalemate with the US represents more than just a battle for supremacy. At a time where tech companies seem to have unfettered access to our private and national lives, it is important that security is never compromised. Companies need to foster confidence by respecting privacy laws. Meanwhile, the propagators of a free world economy must live by example and offer a level playing field.