The Chinese telecom boy Huawei faced new threats to his business Wednesday as some European companies followed the US technology industry in suspended relationships with the company.
Two British telecommunications companies, Vodafone and a unit of the BT Group, said they would suspend plans to include Huawei phones in their upcoming high-speed 5G network. And in a potentially more consistent blow, British chip designer Arm Holdings, an important supplier to Huawei, said it was "in line with the latest restrictions imposed by the US government."
Last week, the Trump administration ordered companies to stop selling US technologies to Huawei, the company calls a potential security threat that could use its telecom equipment to spy on other countries. As a result, Google and other US companies began suspending interactions with Huawei, and now create banner effects for non-US companies.
Huawei has strongly denied the espionage requirements, and the Trump administration's claim that the Chinese government is exercising unhealthy influence on Huawei. Huawei is the world's second largest seller of mobile phones, and the largest vendor of equipment used to build 5G or 5 generation wireless networks. But recognizing the pressure some of them are under, as a result of politically motivated decisions, "Huawei said in a statement Wednesday." We are confident that this regrettable situation can be resolved and our priority remains to deliver technology and products in world class to our customers all over the world. "
The conflict is putting companies and governments all over the world in a tough place, forcing them to choose between alienating the United States or China.
Arm Holdings issued its statement after the BBC had reported that Cambridge, British chip designer had told staff to suspend interactions with Huawei.
An Arm's spokesman said some of the company's intellectual property is defined in the United States and is therefore "subject to US export controls."
Losing an arm as supplier would be a big blow, as it would "cream the key Huawei chips", said Dave Burstein, telecoms analyst at STL Partners and publisher of Huaw a Report Burstein discloses two conflicts of interest on his site, says Huawei has paid its expenses for attending conferences and contracting to STL Partners.
The BT Group's EE division, which is preparing to launch 5G service in six UK cities later this month, said on Wednesday it would no longer offer a new Huawei smartphone as part of that service. Vodafone also said it would release a Huawei smartphone from its lineup. Both companies seemed to link that decision to Google's move to hold back licenses for their Android operating software from future Huawei phones.
However, Europe is far from leaving Huawei. Despite the relentless pressure from the Trump administration, European authorities have refused to issue direct bans on Huawei equipment as they set up the mobile phone towers and other parts needed for 5G networks.
In both Britain and Germany – traditionally two of Washington's closest European Allied officials have said they set high standards of safety and are well aware of the potential pitfalls of using the Chinese company to deliver vital digital infrastructure.
"The companies that supply 5G will have great power in their hands. And we know that Huawei is a de facto state-owned company in China," said Jürgen Hardt, foreign policy spokesman for Germany's ruling Christian Democratic Union. "I don't think anyone is ignorant about the risk. This is not like buying and selling chewing gum. "
Hardly, Germany said how to deal with the risk, and he noted that Germany's decision-making processes" will be independent of what Mr. Trump does. "
He also suggested that the US press has been counterproductive. It could lead to a narrative among German voters, he said, that their government is" just giving up pressure from the US "if Huawei is finally out of the country's network Telecommunications providers have said that without a large, low-cost provider like Huawei, the 5G rolling out process – a poorer resource in a country where 4G coverage is still spotted – can be much more expensive and can be delayed by year.
Key decisions are likely to be made this summer, when Germany chooses winners after a 5G spectrum auction
German Chancellor Angela Merkel pointed out last week that Huawei technology would not be excluded from the competition. Government had already concluded that such a ban would be illegal.
Other European leaders have taken the same approach and resist Washington's prohibition requirements while stressing that they r of the security threat.
France's position, President Emmanuel Macron told a technology conference last week, "is not to block Huawei or any other company. France and Europe are pragmatic and realistic."
Britain, which has used Huawei equipment in its telecom network for more than a decade, also insists that it has the situation under control. The United States connects Huawei parts from the sensitive "core" of the current 4G networks, which include routers and switches that handle large traffic volumes. Vodafone and other carriers use Huawei equipment on the edge of the network, where radio antennas connect to user units.
British officials have said they are considering a similar approach with 5G.
In a statement in response to questions, the National Cyber Security Center said that "Huawei's presence in the UK is subject to detailed and formal oversight. This gives us a unique understanding of the company's software engineering and cyber security processes."
The issue has proven divisive in the UK. Earlier in the month, the indirect withdrawal of defense secretary Gavin Williamson, among the matches of Prime Minister Theresa Mays government, triggered how tough it was to be on Huawei.
The UK is hardly trying to alienate the United States or China at a time when there is a need for both superpowers and their trade and investment to cushion the likely consequences of Britain's planned departure from the EU, said Leslie Vinjamuri, head of Chatham House Americas program.
Karla Adam contributed to this report