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Huawei curbs may have 'bad' ripple effect: expert

By LIA ZHU in San Francisco | China Daily Global | Updated: 2019-05-22 23:47
An exhibition stand of Huawei at the PT Expo China in Beijing, Sept 26, 2018. [Photo/VCG]

Silicon Valley observers wonder if ‘blacklist’ may be about something other than security

As the US government orders its tech companies to cut ties with China's Huawei, experts in Silicon Valley are concerned about the deeper effects, beyond trade and tariff tensions, that the move could have to the detriment of the world.

Late last week, the Trump administration put Huawei and 68 other foreign entities on an export blacklist, which makes it almost impossible for a company on the list to purchase US-made goods.

The US Commerce Department on Monday eased the restriction, allowing US mobile-phone companies and internet broadband providers to work with Huawei until Aug 19.

Huawei, the world's largest telecom-equipment manufacturer and the second-largest smartphone maker, spent $70 billion buying components in 2018. Some $11 billion went to US firms for products including Qualcomm chips, Microsoft software and Google Andriod operating systems.

Google has acted on the government's order, saying it would cut ties with Huawei, but after Monday's temporary exemption, the company said it would work with Huawei over the next 90 days.

"Google technology software is going to be disrupted, so the 25 percent tariff is one kind of disruption, but it's not a disruption involving the flow of technology," said Mark Cohen, a senior fellow at the Asia IP Law Project at the University of California, Berkeley. "This is in a way a little deeper and affects a different sector because we are also dealing with how we collaborate with each other, not only in hard goods but also in soft things."

As for the US government's national security concerns, Cohen warns of "the potential intrusiveness" into commercial transactions, into people's lives and export controls.

"Now we have Huawei as a target. And of course, a lot of us wonder: Is this about Huawei's back door that hasn't been identified? Or is this about 5G and the threat posed by 5G, or is this something else?" Cohen said.

"I'm concerned about this being something else; this is no longer trade negotiations. If it was a trade negotiation, you'd reap what you have accomplished thus far, and perhaps you put off some other issues to another day," he said.

"But if you look at the subsequent reactions, you look at how the security issues are wrapped up in it, you have to wonder whether this is probably no longer about IP," he added. "It may no longer even be about trade deficits. It may be something much bigger that's in the minds of the folks in Washington."

In response to the Trump administration's temporarily eased restrictions, Huawei's founder and CEO Ren Zhengfei said on Tuesday that the US government's move affected the company's low-end products but not high-end ones, especially 5G.

He said Huawei will buy US products as long as the US government allows tech companies to export components. He also said that US companies are trying to lobby the administration to relax restrictions on Huawei.

The US move against Huawei reminded Victor Wang, founding and managing partner of Silicon Valley-based CEG Ventures, of Chinese telecommunications company ZTE, which underwent a US export ban last year. The ban was lifted after the US made a deal with the company.

"I think after the ZTE event, the Chinese government has already made up their mind: We need to develop our entire ecosystem all the way from the chips to the electronic design software," said Wang.

He said that China can persuade some Asian and European countries to adopt the system, but that is not to the benefit of anybody, he said.

Both Wang and Cohen attended a panel discussion hosted by the Asia Society and the Committee of 100 in San Francisco on Monday to share their views on technology and trade involved in US-China relations.

Cohen echoed Wang's view, saying there's a big incentive for China to develop its own system. "This is what people keep talking about — 'decoupling'. When you start saying you can't use our software and chips, then they start developing their own software and chips," he said.

It would ultimately create a situation where there's less interconnectivity, said Cohen. "The ability we have now to take our cellphone and travel around the world, plug in a USB cord and have access to spectrum — all that can be compromised when countries start developing their own system. That's bad for the world, frankly," he said.

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