Parliamentary Intelligence Committee piles pressure on Huawei decision

The Parliamentary Intelligence and Security Committee has unveiled a statement to rubbish delays put on the Supply Chain Review, demanding a decision ASAP.

In the same week as the Chair of the Science and Technology Committee suggested there are no technical reasons to ban Huawei, the Intelligence and Security Committee has demanded a sharp decision or risk losing a strong position in the digital economy.

“5G will transform our day to day lives – if it meets its full potential – and it could be key to our future prosperity,” a statement from the Committee reads. “Such an important decision therefore requires careful consideration. However, the extent of the delay is now causing serious damage to our international relationships: a decision must be made as a matter of urgency.”

While the UK fell drastically behind the norm when it came to adopting 4G, progress has been much more promising for 5G. While calling oneself a global leader usually means little coming from the mouths of groomed politicians, in this case the UK is a genuine leader in the 5G race. There are only a handful of nations who launched ahead of the UK and the opportunity to scale nationwide rapidly is certainly is present.

However, the Intelligence and Security Committee, chaired by Dominic Grieve, feel this is a position which is becoming increasingly vulnerable. The longer this review continues, the slower 5G expansion plans will be, and the greater the opportunity for fast-followers to catch-up.

That said, perhaps the biggest revelation from the Intelligence and Security Committee seems to be the implications to national security.

“However, the telecoms market has been consolidated down to just a few players: in the case of 5G there are only three potential suppliers to the UK – Nokia, Ericsson and Huawei,” the reports states. “Limiting the field to just two, on the basis of the above arguments, would increase over-dependence and reduce competition, resulting in less resilience and lower security standards.”

Despite many critics of Huawei suggesting inclusion of the firm in critical infrastructure would compromise national security, Grieve’s opinion is that reducing the number of available vendors would create more problems. Not only would the networks be more expensive to build, but resilience would be dampened as well.

As you can imagine, Huawei are relatively pleased with the report from the Committee.

“We agree that diversity improves resilience in networks,” said Victor Zhang, Vice-President of Huawei. “We’ve been a part of UK networks for 18 years. 5G is critical for the UK and is the foundation of tomorrow’s digital and mobile economy. Quite simply, it will improve people’s lives. Our priority has only ever been to deliver world-leading technology to our customers.”

This is the problem the Department of Digital, Media, Culture and Sport (DCMS), the National Cyber Security Centre (NCSC) and the wider Government, is facing. Not only does DCMS have to recruit a new Digital Minister after the resignation of Margot James, deal with Brexit and select a new Prime Minister, it has to come to decision on the role of Huawei in the 5G era.

This statement and the report from the Science and Technology Committee is piling up the pressure. The message is relatively clear, these distractions should not undermine the importance of coming to a conclusion on Huawei.

At some point, the UK Government is going to have to hurt someone’s feelings. Either the relationship between the UK and the US or China is going to be impacted. With Brexit around the corner, the UK needs to nurture relationships outside of the European Union, but unfortunately it is unavoidable here.

The pressure is mounting and soon enough the Government will have to make a decision. It has been able to procrastinate, but the more influential groups who press for a conclusion, soon enough the Government will have to show some progress.

US Senators start snapping Trump’s China olive branch

The President’s opponents have promised to be difficult and now they have begun the process of making it official.

A horde of Senators, led by the Republican representative of Arkansas Tom Cotton and Democrat Chris Van Hollen of Maryland, have tabled a new bill which will be known as the Defending America’s 5G Future Act. The bill aims to reinforce the Executive Order signed by Trump, prohibiting the removal of Huawei from the Commerce Department Entity List without an act of Congress.

Other Senators backing the bill include the Republican representatives of Florida and Utah, Marco Rubio and Mitt Romney, as well as Democrats from Virginia and Connecticut, Mark Warner and Richard Blumenthal.

“Huawei isn’t a normal business partner for American companies, it’s a front for the Chinese Communist Party,” said Cotton. “Our bill reinforces the president’s decision to place Huawei on a technology blacklist. American companies shouldn’t be in the business of selling our enemies the tools they’ll use to spy on Americans.”

“The best way to address the national security threat we face from China’s telecommunications companies is to draw a clear line in the sand and stop retreating every time Beijing pushes back,” said Van Hollen. “By prohibiting American companies from doing business with Huawei, we finally sent an unequivocal message that we take this threat seriously and President Trump shouldn’t be able to trade away those legitimate security concerns.”

Despite Trump’s efforts to demonstrate the power of US sanctions, it seems there are politicians who genuinely believe the Chinese threat to the US, even if Trump doesn’t. That, or they just want to be awkward.

It has appeared over the last couple of weeks that the President has only be stirring the national security pot as a means to drive China back to the trade talks table, but other politicians haven’t read the playbook; if this was a demonstration of strength, with the intention to back down one the message had been heard, things are not going to plan.

Rubio is using the argument Huawei is a front for the Chinese Government, Warner objects to the use of national security as a bargaining chip, Blumenthal has bought into the dangers of Huawei as a company and so does Romney, who is also protesting to IP theft. It should come as little surprise, Trump has done an excellent job of rousing xenophobia and fear of globalisation, there were always going to be objections when Trump climbed down off the pillar of propaganda.

Soon enough, Trump will learn he is not able to run the US like a private business. He might be one of the most powerful people in the world, but his word is not gospel; the separation of powers in US Government prevents such suspect strategies. Amazingly, despite efforts to escalate an atmosphere of discord, Trump is managing to convince Senators to reach across the aisle in opposition.

It’s a rather beautiful representation of unity.

Huawei reshuffles its global deck

Chinese vendor Huawei is reportedly doubling down on Italy while scaling back what little presence it has in the US even further.

Thomas Miao, Huawei’s Italian boss, announced the company will invest over a billion bucks a year for the next three years in Italy, according to a Reuters report. No such pledge can be made without a few strings attached, however, and Miao apparently called on the Italian state to ensure a level playing field for Huawei in the country, though its ‘golden power’ that allows it to poke its nose into the telecoms sector if it feels like it.

We’re told Italy recently augmented this power in apparent response to security concerns over the involvement of Huawei and ZTE in the country’s 5G network and Miao wants to make sure those powers will be used with equal vigour towards Ericsson and Nokia too. There were no overt conditions attached to the investment, but it seems clear that it might suddenly disappear if the Italian political environment deteriorates for Huawei.

Meanwhile the WSJ reports that Huawei plans extensive layoffs in the U.S. Specifically this refers to some Huawei research labs called Futurewei, that employ around 850 people. The source is the usual people who reckon they know a thing or two, but it’s totally believable considering how hostile the political climate in the US is towards Huawei. Well-known hedge fund manager Kyle Bass seemed to welcome the news on Twitter.

Having said that Reuters, once more, reports that the US government is set to start some limited trade between US companies and Huawei within weeks. This development comes in the face of considerable domestic opposition to President Trump’s minor concessions and serves to further illustrate what a good move it will probably be for Huawei to clear off from that country entirely.

‘No technical grounds’ to ban Huawei says UK Parliament committee

Chair of the Science and Technology Committee in the UK, Norman Lamb, has stated there is not enough technical evidence to ban Huawei and is demanding a final decision by the end of August.

In a letter written to Jeremy Hunt, Secretary of State for Digital, Culture, Media and Sport (DCMS), Lamb has demanded a conclusion to the Supply Chain Review which has staggered the progress of 5G networks in the UK. Many in the industry have become increasingly frustrated with the state of purgatory which has loomed over the UK telecoms industry, and now the influential Science and Technology Committee has had enough.

“Following my Committee’s recent evidence session, we have concluded that there are no technical grounds for excluding Huawei entirely from the UK’s 5G or other telecommunications networks,” said Lamb.

“The benefits of 5G are clear and the removal of Huawei from the current or future networks could cause significant delays. However, as outlined in the letter to the Secretary of State for Digital, Culture, Media and Sport, we feel there may well be geopolitical or ethical considerations that the Government need to take into account when deciding whether they should use Huawei’s equipment.”

This is the interesting aspect of the letter to Wright. Lamb is effectively telling DCMS and the National Cyber Security Centre (NCSC) to hurry up and make a decision, but not to come to a conclusion too quickly as there are ethical and political considerations to account for. It’s a bit of a mixed message, but a deadline is perhaps overdue for this saga.

The message from Lamb is relatively simple; there are no technical grounds to ban Huawei. Quoting the NSCS’ assumption that 100% secure is impossible, suggesting a lack of concrete evidence against Huawei espionage, reasserting legal obligations placed on telcos to maintain security and pointing towards the international nature of supply chains nowadays are all points made by Lamb to suggest Huawei should be allowed to contribute to network infrastructure.

There are of course concessions make in the letter. Lamb is suggesting Huawei should be excluded from contributing to the network core, while there should also be a mechanism introduced to limit Huawei should it fail on-going competency tests and security assessments, but the message seems to be focused on the idea that Huawei is no more of a security threat than any other organization.

“Supply chains for telecommunications networks have been global and complex,” the letter states. “Many vendors use equipment that has been manufactured in China, so a ban on Huawei equipment would not remove potential Chinese influence from the supply chain.”

Another interesting point raised by Lamb is the legal obligation which has been placed on the telcos to ensure security. Communications infrastructure is a key component to today’s society, but the telcos are the ones who will suffer some of the greatest consequences for poor risk mitigation and due diligence. None of the telcos have raised concerns of an increased security risk from Huawei, and this should be taken as some of the most important evidence when considering the fate of the Chinese vendor.

Ultimately, this is action from the Government. It might kick-off some bickering between the parties (Lamb is a Liberal Democrat) and between departments, but finally someone is forcing DCMS and NSCS into a decision. It seems Lamb is not concerned about the distraction of a party leadership contest or Brexit, he simply wants an answer by the end of August.

Interestingly enough, this letter also forces DCMS into basing the outcome of the Supply Chain Review on politics. By stating there are no technical grounds for a ban, should Wright and his team want to exclude Huawei it will have to be done for another reason. Lamb has asked DCMS to consider the ethical and political weight of a decision, as well as the impact it might have on relationships with allies.

This is now a very difficult decision for DCMS. Lamb has seemingly taken technical considerations off the table; any ban would have to be political.

In China, the government controls everything except the 100,000 hackers attacking Western targets every day

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece Telecoms Consultant John Strand ponders the contradictions in Chinese cyber security policy.

It is well known that the Chinese government has the country on lockdown: people are monitored 24/7 with millions of CCTV cameras; the “Great Firewall of China” blocks access to unapproved content and tracks attempts to circumvent it; municipal party leaders keep tabs on citizens. All networks and equipment are operated by companies either owned by the government or are beholden to them. All surveillance data is aggregated into a unified system of social credits intended to standardize the assessment of the social and financial reputations of individuals and firms.

People who don’t live up to the Chinese government standards are sent to “transformation-through-education” or reeducation camps and generally are denied due process to defend their activities, according to Amnesty International. In practice, not a single bit of information moves outside of the government’s purview.

It’s curious then why more cyberattacks originate from China than any other nation. Indeed, if China was so concerned about law and order, they could end these attacks immediately, but they don’t.

The Chinese goal is to get Global domination from telecommunications networks over computers to IOT devices.

China’s expectation is win global domination in 10 key strategic industries by 2025. At the top of the list is information technology and the key products and services associated with AI, IoT, and smart appliances. China’s national champion in this domain is Huawei Technologies Ltd. Huawei’s founder and CEO Ren Zhengfei, a former Chinese military official, is clear about the company’s strategy to deliver not just the equipment that makes up the world’s information networks, but the devices that attach to it for consumer and industrial communications.

Huawei’s 25-year trajectory has been assisted by China’s government ensuring favorable operating conditions as well as a supply of guaranteed contracts to conduct the surveillance state across 1.4 billion Chinese. It’s no surprise that Huawei supplies the telecom infrastructure in Cuba and Venezuela where the Chinese government has close ties to the political leadership and can provide references on how to monitor political opponents.

Chinese hackers are here there and everywhere

What advanced technology China has not been able to develop itself, it appropriates through other methods, whether forced technology transfer or theft. U.S. cybersecurity vendor Cybereason issued a report describing “an ongoing global attack against telecommunications providers that has been active since at least 2017.”  The report concludes the perpetrator is the APT10, an “advanced persistent threat,” and a state-supported Chinese espionage group.

In December 2018, the U.S. government has indicted APT10 members with conspiracy to commit computer intrusion, conspiracy to commit wire fraud, and aggravated identity theft.  The indictment noted the hackers worked in tandem to steal intellectual and technological information from dozens of commercial and defense technology companies throughout the continental United States.  Additionally, APT 10 is also responsible for the theft of personnel information for 100,000 U.S. Navy personnel.

In Norway, the supplier of finance systems in the cloud Visma saw that Chinese hackers tried to steal client data – Visma is a company that delivers finance systems to hundreds of thousands of companies around the world.

Australian intelligence officials claimed China may have accessed thousands of files and 19 years’ worth of data – to include tax and banking records – on Australian National University students and staff.  Many of ANU’s graduates serve in the country’s intelligence and security agencies.

Symantec unveiled in June how Chinese hackers have attacked satellite and telecommunications infrastructure in the west.

Breaches like these are not new. The Center for Strategic and International Studies identified China as responsible for the greatest number of cyberattacks by any nation over the past dozen years.  It reached this conclusion from examining public data only.  The true depth of China’s efforts – and successes – in penetrating western networks is probably still unknown. Foreign Policy also described China’s Hacker Army in 2010.

One thing is that you use telecommunications networks to monitor people something else is the way you can use computers and the many Internet of Things devices in the future. If a Huawei network is a security threat, then a Lenovo computer or one of the many IOT solutions that Huawei is aiming for may also be a threat in the future.

Cyberhackers are looking for vulnerabilities to exploit, but if you can build products and services with backdoors, the Chinese government has an open road to Western information, technology, and secrets.

Why does the Chinese system stop the many hackers in the country?

There is something to suggest that the Chinese system and the Chinese president Xi Jinping are in control of anything but the many hackers in China. What causes the Chinese government to control almost the entire population, close to those who often try to hack into Western companies and governments’ systems.

If the board of Beijing has the will, there is no doubt that they could easily stop the many Chinese hackers. Some of the most well-known Chinese hacker groups are: APT10, APT1 or Comment Crew, KeyBoy, Honker Union, NCHP or Network Crack Program Hacker Group, Elderwood group etc. Many of these groups have, according to experts, close relations with the Chinese People’s Liberation Army and the Chinese government in general. We suspect that there is a reason why China does not do a serious job of stopping the many Chinese hackers.

Can a contract create security? No.

The fact that the Chinese government and companies like Huawei have not understood how to look at national security in the West has meant that “Made in China” has gained a whole new meaning. In a world where more and more is being digitized, bad experiences have resulted in Western companies and governments not having the same belief in the system in China as you have a few years ago.

When talking to telecommunications companies around the world, many of them respond that the greatest pressure in relation to their use of Chinese equipment does not come from governments but from their business customers who often compete against Chinese companies. Companies that have experienced how their Chinese competitors have stolen their intellectual properties and who have experienced the Chinese spying on them. Many of these companies’ fears relate to things they have experienced on their own body in their own business.

The fear of Chinese networks is not a fear isolated to governments, it is a fear that many large, medium and small companies share with the authorities and with their telecommunications providers.

There has been written and said a lot about Huawei over the past 9 months and about their relationship with the Chinese government. Let’s be honest Huawei uses gigantic resources to influence the press with a story of trusting them and not having the close relationship with the Chinese government that many are talking about.

In recent weeks, Huawei has come up with an offer that they would like to sign a document in which they undertake not to spy. This is probably one of the most grotesque offers I have seen in my business career. I would like to see the CEO of a mobile operator who goes to a board meeting and says that there is nothing to worry about as his government has just entered into an agreement with the Chinese that they must not spy on their customers.

The disclaimer of cyber security is important and ultimately it is not about convincing the telecommunications companies and governments, ultimately it is about business and private customers feel pressured when their data runs through Chinese infrastructure and Chinese devices.

 

John StrandJohn Strand founded Strand Consult in 1994. Its first focus was optimizing the sales process and reducing cost for companies in the IT, Telco and Media industry. John had already built successful consulting company providing sales and marketing services for the Telecom, It, Finance and Publishing sectors. The mobile industry exploded in the 1990s, and Strand Consult grew along with its new clients from the mobile industry, analyzing market trends, publishing reports and holding executive workshops that have helped telecom operators, mobile services providers, technology manufacturers all over the world focus on their business strategies and maximizing the return on their investments.

US/Huawei saga enters the realm of ‘who knows what going on?’

The US Commerce Department has held a press conference to announce some companies can now trade with Huawei, but no-one knows who, how, what or where.

Speaking at the annual department conference in Washington, Commerce Secretary Wilbur Ross has said US companies can now start trading with Huawei, assuming they have had a license approved by his department, which is unlikely to happen, while little guidance has been offered to the criteria on how decisions will be made.

The only clue which we have so far is a reference to ‘national security’. Huawei and its affiliates remain on the ‘Entity List’, though US firms are allowed to do business if it doesn’t compromise national security. What that actually means is anyone’s guess.

The move from the US Commerce Department follows comments from President Donald Trump at the G20 Summit in Japan. In order to get trade talks back on track, Chinese President Xi Jinping insisted the aggression towards Huawei be ended. This seems to be somewhat of a compromise with a nod to the likely domestic opposition the White House will face.

Immediately after Trump signalled his intentions to let Huawei off the hook, two of the President’s biggest opponents, from opposite sides of the aisle, voiced their disapproval. Republican Senator Marco Rubio, who has Presidential ambitions, and Democrat Senator Chuck Schumer, who consistently undermines the President, both suggested they were going to be hurdles in the pursuit of Huawei relief.

For the moment, the language is still very negative. US suppliers can apply to work with Huawei, but applications will be looked at with refusal at the front of mind. There will have to be proof such business would not compromise security, though it is highly likely the vast majority will be turned down.

“To implement the president’s G20 summit directive two weeks ago, Commerce will issue licenses where there is no threat to US national security,” said Ross during the conference.

“Within those confines, we will try to make sure that we don’t just transfer revenue from the US to foreign firms.”

This seems to be an attempt to keep all parties involved happy. In China, it might look like the White House is trying to relieve pressure on Huawei, while in Congress, Trump seems to be attempting to give the impression he is protecting national security. However, it does paint an incredibly confusing picture.

Ross’ statements seem to ignore the fact that supply chains are now globalised, and it is almost impossible to do business without working beyond domestic shores. Few firms will have any concrete understanding to where they stand either.

For those who have lobbied against the ban, its difficult to see whether this is a win or not. Yes, it is somewhat of a concession, but it might not mean anything ultimately. If the US Commerce Department is going to be stubborn, few suppliers might receive the golden ticket to do business with Huawei. Only time will tell whether this is anything more than ego stroking from Ross.

The US or cash? Huawei asks Poland to choose sides

Huawei has put its financially favourable foot forward, suggesting Poland will only get a cash boost if the vendor is allowed to participate in the 5G bonanza.

The role of Huawei in European networks has been under scrutiny for a considerable amount of time, and while it does appear it will be safe in numerous markets, Poland is one which is still hanging in the balance.

According to Reuters, Huawei is prepared to invest roughly $793 million in the country as long as it is allowed to sell equipment to the Polish telcos. While this might be enough to force some politicians into switching on the green-light, Poland is an area where Huawei has found itself in a bit of bother recently.

Back in January, a Chinese employee of Huawei and a Polish national working for Orange were both arrested on spying allegations by Polish security services. Evidence was not produced at the time, though concrete evidence has not been needed to ban Huawei in the US, or in countries such as Australia.

In terms of the US, Poland has had a strong relationship with the country for some time. Polish–US relations were officially established in 1919 and the country has remained one of the most stable allies of the US since. This filters down to the general public also, with Poland one of the most consistently pro-American nations in Europe and the world.

You also have to factor in more direct threats from the US. In February, the combative Secretary of State Mike Pompeo effectively suggested Eastern European nations would have to choose between working with the US or Huawei.

Looking at the Polish economy, a fractured relationship with the US would be difficult. Poland is the 24th largest export economy in the world, with the vast majority of exports heading to nations in Europe. However, the US is the largest single market outside of Europe for Poland, accounting for 2.7% according to Observatory of Economic Complexity, a MIT project.

With the US leaning so heavily on European allies to ban Huawei, seemingly as a means of putting pressure on the Chinese Government, Poland might turn out to be an interesting battle ground. Of course, you have to consider the cash incentive from Huawei.

Poland is effectively the Eastern European home ground of Huawei. The firm employs roughly 900 people in the country and will have a positive impact with its Polish supply chain. With further investments planned in the country, the direct impact of £793 million will keep the Polish Government happy, but there will be considerable knock-ons in other parts of the economy.

Another consideration for Poland will be market competition. Polish telcos will need a suitable amount of competition to ensure investments in network infrastructure is as low as possible. When you consider ARPU on mobile users, the demands become much more evident.

Orange’s Polish business currently has 9.7 million subscribers, each generating roughly £5.67 a month in revenue. For Play, Poland’s largest MNO, just over 12 million subscribers generate £6.71 a month for data services. For Polish telcos to generate ROI, competition between the network infrastructure vendors is clearly needed; banning Huawei might have some difficult implications to stomach.

Huawei knows this of course and is playing an excellent move. Poland will have to make a decision before too long; persist with its relationship with the US or effectively help Huawei gain traction in Eastern Europe.

Study tenuously links Huawei to the Chinese state

A new study used a bunch of CVs to draw the conclusion that many Huawei employees have ties to the Chinese state security services.

The study was conducted by Christopher Balding, Associate Professor at Fulbright University Vietnam, but with support from hawkish foreign policy think tank Henry Jackson Society. It seems to set out to undermine Huawei’s repeated claims of innocence when it comes to collaborating with the Chinese state, as it’s headlined ‘Huawei Technologies’ Links to Chinese State Security Services’.

“Using a unique dataset of CVs that leaked from unsecure Chinese recruitment databases and websites and emerged online in 2018, I analyze the relationship between Huawei and the Chinese state security services,” wrote Balding in his introduction. “In the first of what will be a series of papers, I find that key mid-level technical personnel employed by Huawei have strong backgrounds in work closely associated with intelligence gathering and military activities.”

The core evidence revolves around just three CVs, which the author concedes are a limited source but insists are just a sample of the material he uncovered. One CV reveals a Huawei software engineer also holds a position at the National University of Defense and Technology (NUDT), which apparently means he’s officially employed by the People’s Liberation Army (PLA).

The second CV reveals a person who used to work at a state-owned organisation before joining Huawei as a Ministry of State Security (MSS) representative. Balding notes that the MSS is the main Chinese spy agency and that the CV indicates the person was involved with building lawful interception capability into Huawei equipment.

The third CV covers someone who once worked at China Aerospace Science and Technology Corporation (CASTC), before eventually joining Huawei. Balding reckons that ‘placed him in contact with some of the most sensitive aspects of all PLA operations and technologies.’ The report also notes that the CV talks of expertise in Cisco and Nortel switches and that such equipment was extensively hacked by actors linked to the Chinese state at the time he worked at CASTC.

“This paper has sought to answer whether there is evidence of Huawei acting in concert with the Chinese state, military, and or intelligence gathering services,” concludes the report. “After examining a unique dataset of employee provided work activity at Huawei, it is clear that there is an undeniable relationship between Huawei and the Chinese state, military, and intelligence gathering services.

“While data limitations prevent us from saying whether Huawei follows official commands, acts in concert with the state, or seeks to preempt greater control by acting in advance, there is significant direct evidence of Huawei personnel acting at the direction of Chinese state intelligence with multiple overlapping relationship links through the Chinese state. This should concern governments worried about Chinese intelligence gathering.”

Huawei, you’ll be amazed to hear, doesn’t agree with these conclusions. Here’s its initial statement: “We have not been able to verify any of these so-called ‘Huawei Employee CVs’ Professor Christopher Balding is citing following our preliminary examination. As such, we cannot confirm the veracity of all of the information published online.

“Huawei maintains strict policies for hiring candidates with military or government backgrounds. During the hiring process, these candidates are required to provide documentation proving they have ended their relationships with the military or the government.

“Cyber security and privacy protection have been and will always be our top priorities. Huawei conducts background checks and provides pre-job training to this effect for employees who will access customer networks and data. Huawei requires all such employee operations be authorized and monitored by the customers. This institutional requirement has enabled Huawei’s products and services to serve our global customers well over the past 30 years.

“Huawei understands that cyber security concerns are paramount in the digital world. We welcome professional and fact-based reporting on investigations into Huawei’s transparency. We hope that any further research papers will contain less conjecture when drawing their conclusions, and avoid so many speculative statements about what Professor Balding ‘believes’, ‘infers’, and ‘cannot rule out’.

The company then issued this follow-up statement once it had given the study a further look. “The report fails to identify any clear evidence that Huawei works on military projects. It is based on just three CVs and in each case admits its attempts to link the company to military activity is based on inference and speculation – not hard facts.”

A few third parties have also questioned the rigour of the study, of which this Twitter thread is a good example.

The author, as you would expect, has taken to Twitter to defend his work.

Our first impression was that this whole thing fells like a bit of a reach, which draws dotted lines between Huawei and the Chinese state on the basis of a few CVs. Having said that Huawei does insist that none of its employees have ties to the state and at least one of these CVs seems to contradict that. This study is one of a steady drip of leaks and reports alleging Huawei to have closer ties to the Chinese state than it admits, but conclusive evidence remains elusive.

Ren’s back to tell us how Huawei is starting to ditch the US

Huawei founder Ren Zhengfei appears to be little more than a celebrity spokesperson nowadays, but a recent interview suggests the vendor is just fine with its US shunning.

Speaking to the Financial Times, Ren has once again been called into action to address the tensions between China and the US, as a result of which, Huawei has become a prime target for anyone hoping to inflict damage on the worlds’ second largest economy. The message from Ren is relatively simple; we’re doing OK and we’ll move away from US suppliers.

Such comments will certainly set off alarm bells in the offices of some US semiconductor firms, but it should hardly come as a surprise. The ‘Made in China 2025’ strategy might be unpopular with the US and Europe, but it is by no-means a secret.

‘Made in China 2025’ is an initiative set into action by Chinese Premier Li Keqiang during 2015. Through this initiative, the Chinese Government wants to evolve the perception of the country, ditching the ‘world’s factory’ tagline and moving up the value chain towards higher value products and services. The Government will be contributing $300 billion to the project to enable China to compete with the US.

This plan has been heavily criticised by the US for a number of reasons, but ultimately it all boils down to one; this is a genuine threat to the technological domination of the US on the global scene.

Of course, there are plenty of reasons not to like the idea. Some have suggested it violates the World Trade Organization (WTO) rules on self-sufficiency. Others have said trade secrets have been stolen from foreign companies or unfairly obtained through forced joint-ventures. For ‘Made in China 2025’, companies have to move up the value chain, targeting growth industries such as AI or medicine, and these smarts have to come from somewhere.

However, you always have to bear in mind the end-result irrelevant of path taken to get there. If ‘Made in China 2025’ succeeds, the US will no-longer be the dominant force in the technology world, and other economies could be shattered if China replaces imported goods with domestic.

In the latest interview, Ren is suggesting that even if there is a reprieve from President Donald Trump following the G20 summit last weekend, Huawei will continue to move its supply chain out of the US. Perhaps this is the catalyst which was needed to kick the ‘Made in China 2025’ concept up another gear.

“The US is helping us in a great way by giving us these difficulties,” said Ren. “Under external pressure, we have become more united than ever.

“If we aren’t allowed to use US components, we are very confident in our ability to use components made in China and other countries.”

Although there has been a concession from Trump with regard to the ban facing Huawei, some might view this pardon with scepticism. The President’s opinion seems to change more often than the tides so why would any organization pins its hopes and aspirations on the door of the Oval Office. Instead of a power demonstration, the US seems to have pushed the Chinese further towards autonomy.

While it is far from confirmed, we strongly suspect the huffing and puffing from the White House was little more than a demonstration of power. Huawei’s entry onto the Entity List might have been an aggressive move to gain the upper-hand in trade talks with the Chinese; look what we did to ZTE last year, the US appears to be saying, so play nice or we’ll do the same to Huawei.

But it doesn’t seem to have worked; Huawei is still alive and still OK, if you listen to Ren.

How OK Huawei actually is remains to be seen. Ren has been wheeled out to put a positive spin on the situation, but the picture is rather gloomy. Smartphone shipments are set to decline by 40-60% over the remainder of the year, Google hasn’t said it is once again on friendly terms with Huawei despite Trump’s amnesty, and some have questioned whether China is capable of filling the semiconductor hole created through the China/US vacuum.

Huawei has done a lot to add diversity to its supply chain in recent years, while also moving numerous operations to its own fabless semiconductor company HiSilicon, but can it satisfy its appetite for more specialised components? Huawei works with a number of US firms who have niche operations, Qorvo supplies radio-frequency systems and solutions for Huawei for example, and when it comes to specialised components, the US rules the world.

For certain segments of the semiconductor industry, field programmable gate arrays as another example, and China has not been able to replicate the US success just yet. Despite what Ren says about moving Huawei’s supply chain out of the US, it will still be reliant for some incredibly important cogs.

One way of viewing this situation is that there is a short-term demonstration of power. Without the likes of Xilinx, Qualcomm, Qorvo, NeoPhotonics and numerous other semiconductor businesses, Huawei cannot produce the products it is promising customers. Not yet at least.

But long-term, perhaps this approach is simply forcing ‘Made in China 2025’ to accelerate and eroding the control the US has globally over some very high-value, highly profitable segments. Prior to the trade war, US companies were inside the tent. Admittedly conditions were not perfect, but they were inside not outside.

Perhaps this is the watershed moment; companies are going to be forced out as companies like Huawei increasingly look for domestic suppliers, and once they find them (by luck, convenience or necessity) there is no coming back.