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Asia Times | The US ban will not track Huawei's European 5G rollout



Two high-ranking European government officials told the Asia Times in background discussions that a US ban on the sale of electronic components to Huawei Technologies would not stop the Chinese telecom company from expanding 5G mobile networks in Europe.

Europe does not I do not really have a choice in the case, emphasized the officials in background interviews, because the United States does not offer competing products, and Huawei's competitors – Ericsson and Nokia – do not have the capacity or the knowledge to replace the Chinese giant.

The two Scandinavian companies do not offer serious competition to Huawei, but work in close cooperation with the much larger Chinese company. Huawei's research and development budget is about twice that of Ericsson and Nokia combined, according to public sources.

So intertwined, Huawei, Ericsson, and Nokia's European telecom infrastructure activities were unable to ban the sale of parts to one of them without affecting the others, explaining an official. The official, who monitors telecommunications policy for one of the 1

0 economies, doubted that Washington's action would have a major impact.

German Chancellor Angela Merkel and Dutch Prime Minister Mark Rutte told reporters Thursday that they would not ban the Chinese firm, adding that the guidelines were in place to protect their security. French President Macron told a technology conference Friday that France's "perspective is not blocking Huawei or any other company. France and Europe are pragmatic and realistic." Macron stressed that France would balance security with access to good technology.

After the Trump administration suspended US exports of handset ships to the smaller Chinese telecommunications company ZTE during last year, Huawei was carrying out a crash program to produce its own advanced chips. I reported exclusively in April that the Chinese firm had reached self-sufficiency in December 2018.

Huawei's Kirin chipset, designed by HiSilicon subsidiary, and manufactured by Taiwan Semiconductor Manufacturing and other companies, effectively replaces the highest-ranking Qualcomm chips [19659002] A note from HiSilicon's CEO, published last week, confirms that Huawei is independent in chip making and compares the company's self-sufficiency program to the Chinese Communist Party's long March 1934-1935. 19659002] Huawei imports several dozen electronic parts from US companies. Nikkei Asian Review and other media reported last week that Huawei has saved one year's inventory of critical components. Finding alternative sources or just reverse engineering products is a much less difficult challenge for Huawei than developing its own chipset.

Google has suspended updates to its Android operating system for Huawei phones, Reuters reported on Sunday. Huawei has developed its own handset operating system as a backup, but the Google ban will limit Huawei's use of Google apps, including Gmail.

China can repay itself with a price war for advanced chips. Huawei announced a full portfolio of artificial intelligence-enabled chipsets under the Ascend brand, which ran large data processors as well as phones.

Having taken a dominant position in telecom equipment, Huawei now competes with the US's best chip design companies, including Qualcomm and Nvidia, in the processor room. Business experts speculate that China may oppose the US export ban by drastically reducing AI-enabled chip prices, pushing US companies out of Asian and European markets that make up the bulk of sales.

The US export ban can come back, locking Asian and European buyers to China's new chip technology. Huawei became the dominant player in the telecom equipment market by subjecting the competition, forcing competitors out of the market and hiring their best talent.

Huawei's 188,000 employees, 40,000 are foreign, many employed in twenty-one research institutions that Shenzhen firm supports around the world. If the Trump administration does not hinder Huawei's 5G rollout, as Europe's leaders have suggested, it will also Huawei also emerge as a dominant player in chip design and manufacturing.

Not surprisingly, semiconductor supplies were among the worst artists on US stock exchanges last week. Nvidia was the worst performer at S&P 100 and lost 7.2% during the week. Trade war worried about dominating sector performance in the S&P 500. Agricultural machinery was the worst performing sector in the broad index, a surprising result given the vulnerability of US farm exports.

The most efficient sectors all had a negative correlation with thermal returns

I continue to recommend defensive sectors in the United States in a barbell with Chinese stocks.


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