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Management's arrest, security issues stymie Huawei's reach

BEIJING (AP) – Mens and Huawei leader faces possible US charges on trade with Iran, fighting the Chinese technological giant's ambition to lead the next generation of telecommunications with security issues abroad.

Australia and New Zealand have ruled out Huawei Technologies Ltd. as a fifth generation network provider. They joined the US and Taiwan, which limits the use of technology from the largest global provider of network switching equipment. This week, Japan's cyberspace agency Huawei and other suppliers who are considered to be risky will be restricted to public procurement.

Nobody has issued evidence of the unfairness of Huawei, who denies there is a risk and has operated a laboratory with the UK government since 201[ads1]0 to conduct safety investigations of its products. But the charges, due to increasing excitement over Chinese technology and spying, threaten their ability to compete in a sensitive field that carriers are preparing to invest billions of dollars.

"This is something that definitely concerns Huawei at this stage because it is a political angle to it and a business," said Nikhil Bhatra, senior researcher of IDC.

Huawei is no ordinary electronics supplier. Founded in 1987 by a former military engineer, the company is China's first global technology brand and a national champion in the head of an industry. Beijing promotes as part of the work of transforming this country into a technological stage. It has China's largest enterprise research and development budget of $ 89.7 billion ($ 13 billion) in 2017 – 10 percent more than Apple Inc.'s – and foreign customers can draw on a multibillion dollar line of credit from the official China Development Bank.

It sets Huawei at the heart of tribes over the ruling Communist Party's technological aspirations, competition with Western economies and ties between companies and government, including possibly spying.

An EU official Andrus Ansip expressed concern that Chinese rules requiring telecommunications service providers to collaborate with intelligence services will imply possible "mandatory backdoors" in computers or telecommunications systems.

"We must be worried about Huawei and other Chinese companies? Yes, I think we must be worried," said Ansip, Vice President of the Trade Block for a Digital Internal Market.

The company says it is employee-owned and operates independently. It refuses to design equipment to allow bugging or controlled by the Communist Party – an attitude critic, including some US senators, is dubious in China's state-dominated system. The company notes that it uses the same global component vendors as Western manufacturers.

"No one flame proof against the company has ever been presented," Huawei said in a written answer to questions.

The company is "most investigated supplier of telecommunications equipment," said the statement. "It says foreign officials regularly visit to see" the length we go to insure them about the integrity of our technology. "

Huawei, headquartered at a Shenzhen foliage school, in The honesty of Hong Kong has been working at 5G since 2009 and is one of the largest suppliers of technology, together with Sweden's LM Ericsson and Finland's Nokia Corp.

The company that has received technology to be approved is responsible for harvesting billions of dollars from sales and license fees.

5G promises more than just faster mobile service. It is designed to support large-scale networks of devices from internet-connected cars and medical equipment for factory robots and nuclear power plants. Annual sales of 5G network equipment are expected to reach 11 billion dollars by 2022, according to IHS Markit.

It makes it more politically sensitive, increases the potential cost of security errors and requires more trust in suppliers.

Even a "very small" risk could disqualify a supplier, says Andrew Kitson, head of the technology industry for Fitch Solutions.

But Kitson sees commercial motives for the charges against Huawei. He said that many come from American and European suppliers who lose market shares to Chinese rivals.

"There has never been any evidence," said Kitson. "They only have to make any insinuations that other governments can sit up and think, hang on, even if there is no evidence, there is too much of a risk."

Huawei took a new hit in December. 1 then Chief Financial Officer, Meng Wanzhou, was arrested in Vancouver on US accusations of lying to banks for transactions with Iran.

Huawei is politically important than ZTE Corp., a Chinese rival who was almost out of business after Washington blocked it from buying American technology over exports to Iran and North Korea. President Donald Trump restored access after ZTE paid a $ 1 billion fine, replaced its executives and employed US-picked compliance officer.

It will not work with Huawei, which is "the key to Beijing's ambition to lead globally" at 5G, Eurasia Group said in a report. It said that Chinese leaders would see an attempt to impose ZTE-style controls as "constitutes an open technology war."

Huawei's US business evaporated following a 2012 congress report, indicating company and ZTE security threats. That same year, Australia forbade it from bidding on a national high-speed broadband network.

Taiwan, the autonomous island, Beijing claims its territory and threatens to regularly attack Huawei and other Chinese telecommunications technologies in 2013. Legislators are discussing expanding controls.

Older locations deliver Huawei mobile operators in Asia, Africa and Europe. The company says it serves 45 of the 50 largest global telecom operators. Worldwide sales in 2017 increased by 16 percent to 604 billion yuan (92.5 billion yuan), while earnings rose 28 percent to 47.5 billion yuan (7.3 billion yuan).

Huawei accounted for 28 percent of last year's 32 billion global sales of mobile networking equipment to IHS Markit. Ericsson was 27 percent and Nokia had 23 percent. ZTE, South Korea's Samsung Electronics Corp and other suppliers did the rest.

Asked about the impact of security issues on the 5G business, Huawei said the year's total revenue – which also includes number 3 global smartphone brand and business entity – should exceed $ 100 billion. It will be an 8 percent win in 2017.

Washington is pushing allies to throw Huawei, but Germany, France and Ireland say they have no plans to ban any 5G network providers.

Huawei "has an important place in France" And the investments are welcome, says the economist of the country, Bruno Le Maire, on December 7, according to news reports.

The company has agreements on field test 5G equipment with Deutsche Telekom, Bell Canada, France Bouygues, Telecom Italia, India Bharti Airtel and Singapore, South Korea and Ireland operators.

Chinese Foreign Ministry complained critics were "hyping so-called threats" to prevent Huawei's business without evidence.

Regarding Ansip's concern for intercepting "We have no such law as permitting" back doors, a spokesman, Lu Kang said.

IDCs Bhatra said that except Huawei would leave the countries with only two major 5G suppliers, Ericsson and Nokia. It will limit competition, increase prices and slow innovation, "he said.

Already analysts in telecom equipment say more in the US and other markets that lack cheaper Chinese competitors.

"There are quite widespread implications," Bhatra said.

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