Huawei remains a blacklisted company by the US government, but that apparently hasn't stopped it attempting to circumvent sanctions to get its hands on more advanced chips.
As Bloomberg reports(Opens in a new window), Huawei is thought to be "providing support" for a local startup called Pengxinwei IC Manufacturing Co. (PXW) which was founded in 2021. Why is that raising eyebrows? Because PXW is run by a former Huawei executive, is located close to Huawei's headquarters in Shenzhen, and is ordering chipmaking equipment in order to build a semiconductor fab. Those orders include foreign suppliers, which Huawei no longer has access to.
It's currently unclear if PXW's plans violate US trade sanctions with China, but the US Commerce Department’s Bureau of Industry and Security (BIS) has the startup on its radar. The relationship with Huawei hasn't gone unnoticed, with BIS explaining:
"BIS is constantly on the lookout for efforts to evade export controls, including those related to parties on the Entity List like Huawei, and uses open-source, proprietary and classified information to substantiate and then, when appropriate, apply our administrative or criminal law enforcement as well as regulatory tools to address violations."
If PXW is allowed to import foreign equipment to manufacturer semiconductors, the company expects to start producing 28nm chips in 2025 (14nm and 7nm chips are also planned after that). It's unclear if Huawei will be a customer for those chips, but the strong link between the two companies at this early stage suggests Huawei would likely benefit from PXW's success, especially when it comes to producing networking hardware.
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In 2019, the Central Intelligence Agency reported that the Chinese government directly funded Huawei and enabled the company to spy on its consumers. In the same timeframe, the National Defense Authorization Act went into play, restricting “American government agencies from using products from Huawei and their smaller competitor ZTE.” Moreover, the bans that went into place limited what Huawei could purchase from United States-based semiconductor manufacturers and other critical material manufacturers involved in the technology sector.
If successful, this would allow Huawei to regain its footing and begin producing devices in earnest again. However, it remains to be seen if PXW will violate U.S. trade sanctions in supplying Huawei, as that would limit what equipment can be purchased by the company. Moreover, it is reported that the company’s first products, expected in 2025, will be on 28-nanometer technology leaving the plant six or more generations behind.
Given the accusations and evidence against Huawei, it will be difficult for any company to affiliate with the denylisted organization. Some of the U.S. restrictions may extend to this new company and prevent PXW from getting off the ground. However, if not, it still sounds like Huawei will be comparatively stuck in the stone age of semiconductors for a little while.
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Global tech powerhouse Huawei Technologies is concentrating on digital infrastructure, sustainable development and a strong ecosystem as part of its strategies to deepen cooperation with Asia-Pacific nations, including Thailand, in boosting its digital power.
According to ICT market research firm McKinsey, the pandemic accelerated the digital economy by seven years globally and by 10 years in Asia-Pacific.
"We want to be a key contributor to the digital economy in Asia-Pacific," Simon Lin, president of Huawei Asia-Pacific, told the Bangkok Post in an exclusive interview. "We need to build digital intelligence and green Asia-Pacific together."
He said Huawei invested heavily in R&D and innovation solutions for the ICT industry over the past two years. In 2021 the company allotted 22.4% of its revenue to R&D.
To deepen its cooperation with countries in the region, the company highlighted three core aspects.
The first lies in digital infrastructure, including communication equipment, data centres and cloud platforms.
"We need to digitalise traditional industries and create value for customers," Mr Lin said.
"Industries need digital infrastructure that offers a more intelligent network to provide more digital services to society, not only being connected, but also improving quality of life."
He said the company also provides automated artificial intelligence functions for network operation to make the network more effective at supporting new digital services and business models.
"This is our vision -- to use technology to change the world," Mr Lin said.
The second strategy involves sustainable development, which is widely supported by countries many around the world.
Huawei Digital Power integrates digital and power electronics technologies and enables energy digitalisation for a greener future. One example is working with partners to instal smart photovoltaic rooftops on 1,200 stores in Thailand, he said.
The third strategy involves building an open and healthy ecosystem by using innovative platforms to support industry digitalisation.
In Thailand, Huawei and the Digital Economy Promotion Agency have jointly developed the Thailand 5G Ecosystem Innovation Centre as an incubation and digital innovation development accelerator.
The country also has the 5G Alliance to serve 5G ecosystem development.
"We need to create value for our customers," Mr Lin said.
"When the Asia-Pacific market is booming, we will see a very fruitful result."
DIGITAL ECONOMY DRIVE
He praised Thailand for its plan to make the digital economy constitute 30% of the country's GDP by 2027, saying this could turn the nation into the Asean leader for digital economy development.
"Huawei aims to be a major contributor to the Thai digital economy by working together with carriers to provide digital infrastructure," said Mr Lin.
He said the 5G network covers 78% of the Thai population, and this can be raised to 98% in five years.
Huawei can support carriers developing the fibre-optical network in Thailand to Boost home internet connection coverage, said Mr Lin.
The company can also provide network security technology through data centres, cloud services and WiFi 6.
He said Huawei can provide a platform for global independent software vendors and app developers, enabling them to enter the Thai market.
Participants take part in Huawei's Digital Bus project aimed at enhancing the digital skills of workers.
According to Mr Lin, there are 700 million users of 5G services and 2 million 5G cell sites globally.
When user penetration reaches 16%, it will drive positive business results for carriers. If 5G traffic reaches 20% of total network traffic, telecom carriers would reach a break-even point for 5G business, he said.
In Thailand, with continued support of 5G policies, investment and the ecosystem, Huawei expects 5G traffic to reach 20% of total network traffic by the end of this year, with 5G user penetration of 20%.
By the end of 2025, the 5G network is expected to cover 92% of the Thai population, with 5G user penetration and 5G traffic forecast to exceed 50%.
"We will see more exciting innovation from mobile operators with augmented reality and virtual reality features, cloud gaming and rich content, which are driving customers to migrate to 5G," said Mr Lin.
He said all of Asia-Pacific, including Thailand, is concentrating on building digital skills for people.
Last year Huawei signed a memorandum of understanding with the Asean Foundation to train 500,000 digital workers over five years with an investment fund of US$50 million.
"Towards this goal, we need long-term and systematic efforts. Our talent initiatives focus on three main areas, covering leadership, skills and knowledge," said Mr Lin.
"Through Asean Academies in Malaysia, Indonesia and Thailand, we have trained over 17,000 local officials. For the upskilling and reskilling of ICT practitioners, we have trained almost 120,000 people."
For young talent, the company has several programmes to promote knowledge transfer, including the Seeds for the Future project, which this year saw 120 students from 16 Asia-Pacific countries gather in Thailand to learn ICT technologies.
"We believe the foundation of all talent initiatives is value creation for society," he said. "In the fourth quarter, Huawei's Digital Bus training programme will go to six more provinces in Thailand to train 1,000 rural doctors and volunteers."
Huawei reportedly plans to relaunch 5G phones as early as next year in an effort to regain market share that was lost in the fallout from US sanctions.
A Financial Times report published Thursday says Huawei may try to circumvent US sanctions by redesigning its smartphone to accommodate "less advanced" chipsets made by Chinese companies that will enable 5G. However, this approach risks impacting user experience, the report says. Prior to Washington tightening sanctions, a Huawei subsidiary designed the chipsets before it was manufactured by leading chipmaker Taiwan Semiconductor.
The report went on to say that Huawei was also considering phone cases with built-in modules that enable 5G connectivity. Such cases are already on the market.
Huawei pointed to the restrictions on what it can offer and how that affects its operations.
"Huawei strictly follows the law in all countries where we operate. As a result of sanctions, we can only offer consumers 4G smartphones," a Huawei spokesperson told CNET in an email on Friday. "Despite this, we will continue to innovate and keep bringing a better user experience to consumers."
Earlier this year, Huawei launched a nearly $2,000 foldable phone, called the, but it's only compatible with 4G networks in this era of 5G, the next-generation wireless technology.
Analysts say that even if Huawei manages to launch new 5G phones, it'll face an uphill battle in reclaiming international market share without Google. US sanctions have also restricted Huawei's access to Google, which means its phones do not run popular apps such as the Google Play Store or Gmail.
In 2021, Huawei's revenues for its smartphone-led consumer business plunged by 50% compared to the year before.
The US has long alleged that Huawei maintains a tight relationship with the Chinese government, creating fear that equipment from these manufacturers could be used to spy on other countries and companies. Huawei has repeatedly denied that its products pose a security threat.
In 2020, the Trump administration leveled tougher sanctions on Huawei, which restricted any foreign semiconductor company from selling chips developed using US technology to the Chinese firm, without first obtaining a license to do so.
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The government has extended two deadlines for the removal of Huawei equipment from the UK's 5G networks.
The requirement to remove the Chinese company's products from the network core has been pushed back 11 months, to 31 December 2023.
And a limit on the amount of Huawei kit in fibre-broadband infrastructure must now be achieved by the end of October, rather than July, next year.
It follows advice from the National Cyber Security Centre.
The NCSC decided the security of Huawei's products could no longer be managed, in 2020, following a US decision to place the company under sanctions, and the UK government said all its equipment had to be stripped out of the UK by the end of 2027.
This and eight other interim deadlines remain unchanged.
The US authorities fear Huawei's 5G equipment makes countries vulnerable to their data being accessed by the Chinese state or having critically important services switched off.
Huawei has denied being controlled by the Chinese government or posing a security threat.
The new deadline extensions follow consultations with Huawei and UK telecoms providers.
The government said a small number of operators had indicated - because of the pandemic and global supply-chain issues - the original deadlines risked network outages and disruption for customers.
Providers should meet the original targets wherever possible, it said, and it expected most of them would do so.
The direction to remove Huawei equipment is also being put on a legal footing through the handing of notices called designated-vendor directions to all 35 UK telecoms network operators, under the Telecoms Security Act, which came into force in November 2021.
Digital Secretary Michelle Donelan said it allowed the government to "drive up the security of telecoms infrastructure and control the use of high-risk equipment".
"We must have confidence in the security of our phone and internet networks, which underpin so much about our economy and everyday lives," she added.
NCSC technical director Dr Ian Levy said: "The Telecoms Security Act ensures we can be confident in the resilience of the everyday services on which we rely and the legal requirements in this designated-vendor direction are a key part of the security journey."
Huawei has been issued a separate document - a designation notice - which categorises the company as a high-risk vendor of 5G network equipment and services and sets out all of the reasons the government considers it a national security risk, including the impact of the US sanctions.
An image of a woman holding a cell phone in front of a Huawei logo displayed on a computer screen. Canada on Thursday said it plans to ban the use of China's Huawei Technologies and ZTE 5G gearto protect national security, joining the rest of the so-called Five Eyes intelligence-sharing network.
Artur Widak | Nurphoto | Getty Images
LONDON — The U.K. government extended a deadline for telecom companies to remove equipment from Chinese tech giant Huawei from their 5G mobile networks.
Telcos will now have until December 2023 to remove Huawei equipment, such as that used at phone mast sites and telephone exchanges, from their network "cores" — where some of the most sensitive data is processed. The government had originally ordered them to do so by January.
Meanwhile, a requirement for firms to reduce the level of Huawei equipment in their non-core networks to 35% has been delayed to October 31 2023 — later than an initial July ultimatum.
They will still need to ban new Huawei 5G installments and completely eliminate it from their networks by the end of 2027. The order was enshrined in law last year with a piece of legislation called the Telecoms Security Act.
Prime Minister Liz Truss's government has sent legal notices to 35 U.K. telecoms network operators to officially enforce the move.
Britain had initially said it would allow Huawei in its rollout of 5G networks. But in 2020, the government opted to ban Huawei over data security concerns. The Shenzhen-based firm was classed as a "high risk" vendor, meaning it posed possible risks to national security.
Officials on either side of the Atlantic are worried Huawei's technology could allow China to spy on sensitive communications and other data. Huawei has long denied the claims and said moves to block it are "politically motivated."
That decision was a result of the National Cyber Security Centre's emergency review of Huawei shortly after the U.S. imposed sanctions on the Chinese giant cutting it off from key semiconductor supplies. The move also came amid an intense trade battle between China and the U.S. — a close ally to the U.K.
Previously, telecoms groups like BT and Vodafone had been told to remove Huawei 5G equipment from their "core" by January 2023. However, some companies took issue with the measures, concerned this didn't supply them enough time to strip out the equipment from their infrastructure, a costly exercise.
In June, BT requested an extension beyond the government's January 2023 for removal of Huawei from core 5G infrastructure, saying it might not meet the deadline due to delays caused by Covid-19 lockdowns. BT CEO Philip Jansen had even warned the ban may result network outages for customers if implemented too hastily.
Vodafone has already removed Huawei from its core.
In a press release Thursday, the government said it extended the January 2023 deadline to "balance the need to remove Huawei as swiftly as possible while avoiding unnecessary instability in networks."
A BT spokesperson wasn't immediately available when contacted for comment by CNBC.
U.K. Digital Minister Michelle Donelan said: "We must have confidence in the security of our phone and internet networks which underpin so much about our economy and everyday lives."
She added: "Thanks to this government's tough new laws we can drive up the security of telecoms infrastructure and control the use of high-risk equipment. Today I'm using these powers and making it a legal requirement for Huawei to be removed from 5G networks by 2027."
Ian Levy, technical director of the U.K. National Cyber Security Centre, said: "Society increasingly relies on telecoms and the NCSC, government and industry partners work closely to help ensure that these networks are secure and resilient in the long term."
"The Telecoms Security Act ensures we can be confident in the resilience of the everyday services on which we rely, and the legal requirements in this Designated Vendor Direction are a key part of the security journey," he added.