Canada and the U.K. have changed their minds. They now want to cancel their Huawei agreement to upgrade their 5G wireless networks. As a wireless analyst I closely follow all the players and have for more than 30 years. Over the last decade, Huawei has been an important global player in wireless. That being said, they now seem to be facing a growing headwind that could seriously impact their growth going forward.
I have attended several Huawei events, met with several high-level executives and listened to their side of the story. I have determined they are all very nice people and they all believe there is no real security threat.
That being said, the U.S. government does not trust Huawei. They believe the Chinese government will play a role going forward monitoring calls and data and that is a significant security threat.
That’s why the US is not doing business with Huawei. That’s why Canada and the UK are now doing the same thing. I expect that will mean other countries could soon follow.
Does Huawei pose security and privacy threat?
This issue seems to be more than Huawei can fix, and that’s the problem. At this point, we are at a stalemate.
The U.S. government seems convinced that the Chinese government will ultimately be able to monitor and gather data on business users and individuals in other countries.
That means everyone, governments, businesses and consumers. And in the United States as well as other countries, privacy and security is key.
They have been trying for years, and so far, there does not seem to be a way for Huawei to change the mind of their detractors.
That means not only will Huawei miss out on the 5G wireless upgrade cycle in the United States, but a growing number of other countries as well.
Huawei has grown worldwide by offering steep discounts
Huawei will always be able to do business in China. After all they are a Chinese company. They will also continue to do business is certain other countries who are not concerned with the possible security threat.
However, a growing number of other countries are starting to push back. And that is a growing problem for the company.
The United States government says the security threat is so great, if other countries use Huawei gear, that will ultimately limit how far the US will trust them.
Not that we won’t trust other countries, but we won’t trust the communications with them if China could be monitoring their voice and data communications.
This issue was raised a decade ago when we were moving from 3G to 4G. Since then, only smaller wireless carriers did business with Huawei because of the steep discounts.
You see, companies and countries are tempted to do business with Huawei because they offer a significant discount, making the upgrade less costly.
Many say this discount is subsidized by the Chinese government.
The fear goes back to the old story of the Trojan Horse. How an invading force was hidden inside a giant horse statue that was given in peace until soldiers broke out and took over another country.
The fear is not of war, but of competition and loss of private and secure information.
This time as we move from 4G to 5G on a nationwide and global basis, there is a huge opportunity for all wireless players. Everything will change. That means wireless networks and handset makers, but it also means other industries who will use 5G as well.
This is a huge growth opportunity, but at this time the battle against Huawei is intensifying even more.
Qualcomm, Ericsson, Intel and other competitors to Huawei
Qualcomm and Huawei are the world’s two largest and most significant players in 5G. So are Ericsson, Intel and others to a smaller degree. So, whatever Huawei loses will be a win for these other competitors.
Huawei is not going away. They will continue to be a powerful company in China. They will also continue to be the network builder for some other companies in some other countries because of their low prices.
However, the future is not as bright for them as it has been over the last decade. It will be interesting to watch this industry over the next decade as we move further into a 5G wireless world. To see which competitors are the real winners and losers and what impact this current battle will ultimately have on Huawei.
