On April 25, the Wall Street Journal quoted sources as saying that the U.S. Department of Justice was investigating whether Huawei violated U.S. sanctions on Iran. Reuters reported that the New York federal prosecutor conducted a similar investigation on Huawei at least since last year.
At present, it is not clear to what extent the investigation of the U.S. Justice Department has progressed, and the specific allegations made by federal agents against Huawei. Huawei's spokesman also declined to comment.
The Daily Economic News reporter noted that Huawei’s accusations this time were more serious than the previous sanctions imposed on ZTE. In terms of the nature of the organization, this investigation by the US Department of Justice against Huawei is a criminal investigation, which means that Huawei may face additional “criminal penalties.†Previously, ZTE’s sanctions against the US Department of Commerce were administrative penalties.
After news of Huawei’s investigation into the screenshots, the stock prices of well-known American chip makers such as Nvidia, AMD, and Qualcomm all fell, which also continued the downward trend in the collective collapse of US technology stocks.
The reporter noted that while Huawei did not respond to the latest report for the time being, in February this year, Huawei spokesperson spoke rigorously to deny allegations of so-called espionage by the United States. Huawei's partners in Europe and other countries in North America have also tested the quality of Huawei products.
An executive from Canada’s Bell Telecom believes that the U.S.’s censorship of Huawei is only to protect the U.S. industry. Facts have also proved that Huawei, which has "invincible in the world" in other global markets, has a market share of less than 1% in the United States. This is not the result of normal competition. It is a proof that the United States has prevented Huawei from developing at all levels.
Huawei faces more serious allegations
The Daily Economic News reporter noted that according to foreign media reports, the nature of the allegations faced by Huawei this time was more serious than that of ZTE. According to the Wall Street Journal, the U.S. Justice Department’s investigation into Huawei is a "criminal investigation," and the U.S. Department of Commerce and the Ministry of Finance may also impose additional administrative sanctions and regulatory sanctions on Huawei.
If the U.S. Justice Department's investigation finds that Huawei intentionally violates U.S. export laws, then Huawei may also face criminal penalties. In addition, all individuals suspected of involvement in illegal activities may also face prosecution.
The Daily Economics reporter noted that the New York Times reported earlier last year that the US Treasury issued an administrative summons to Huawei as early as December 2016, accusing Huawei of suspected violation of sanctions.
In an earlier report in 2012, a report from the US Congress stated that Huawei and ZTE may be involved in activities that threaten the confidentiality and security of U.S. technology. Since the end of 2017, the U.S. government has also taken further measures to restrict the activities of the two companies in the United States.
Both Huawei and ZTE have denied that they will pose a threat to the future development of U.S. mobile communications. Huawei’s spokesperson also stated that no government has ever asked the company to monitor or destroy other countries.
According to research firm Dell'Oro Group, in 2017, Huawei led the global telecommunications equipment market with a share of 27%, while ZTE ranked fourth with a 10% share.
However, the two companies’ market share in the United States is less than 1%, which is a lot worse than their share in the global market. This is also due to the U.S. government’s restrictions on Huawei and ZTE.
Huawei has encountered many obstacles in the United States
In December last year, Trump signed a bill prohibiting Huawei and ZTE’s equipment from participating in the construction of US nuclear weapons infrastructure. At the same time, the legislators of the House and Senate also initiated a bill that prohibits the use of Huawei Technologies and its contractors. ZTE’s electronic products; US Congressional aides also stated that they hope to include the bill in the next year’s defense spending bill to ensure rapid passage.
The Wall Street Journal report also stated that before the US national security advisers suggested that Trump block Broadcom’s hostile takeover of Qualcomm, Huawei specifically mentioned Huawei’s dominant position in the telecommunications equipment industry.
Last week, the two-party senator group led by Republican Tom Kauteng also sent a letter to the U.S. Department of Agriculture asking the Ministry of Agriculture to consider not purchasing telecommunications equipment from Huawei and ZTE. In addition, the U.S. Federal Communications Commission (FCC) took similar measures last week to prohibit US small operators and mobile operators in rural remote areas from using Huawei and ZTE’s electronic products. If operators use these Chinese manufacturers' electronic products, they will not receive FCC subsidies.
U.S. telecommunications operators also decided to separate from Huawei. In 2018, Huawei’s plan to enter the United States was blocked. After AT&T and Verizon, four of the top four telecom operators in the United States, refused to cooperate to sell mobile phones, the US’s largest e-retail store, BestBuy, reported that it would stop selling Huawei’s mobile phones.
In addition, under the backdrop of the US government’s strengthening of Huawei’s censorship, some US allies have also become more cautious. Huawei also has a large volume of business in markets such as Europe, which may be affected in the future.
Huawei has firmly denied the accusation
The Daily Economic News reporter noted that although Huawei did not comment on the latest investigation report by the US Department of Justice, in February this year, Huawei had firmly denied the allegation that the United States had engaged in espionage.
A Huawei spokesperson emphasized at the time that
“With its global supply chain and production capabilities, Huawei is trusted by governments and customers in 170 countries around the world, and there is no risk of any network security beyond that of the communications provider.â€
In response, many Huawei overseas users have also confirmed Huawei's claim.
Bruce Rodin, vice president of wireless networking at Bell Telecom, Canada, said that his company has hired an external network security company to conduct extensive testing of Huawei products.
Bruce told Reuters, “We have been using Huawei equipment for 10 years and have never seen any malicious code or backdoor.†Bruce-Roding believes that the US review of Huawei is only protecting its own industry.
Deutsche Telekom stated that the company has cooperated with Huawei at multiple levels and has not found any evidence of security risks. A spokesman for Deutsche Telekom stated that
"The hardware is manufactured according to Deutsche Telekom's specifications and checked by our own security department."
In February of this year, British Prime Minister Teresa May expressed her support for Huawei’s plan to expand the UK market during a trade visit to China.
The Wall Street Journal had previously analyzed that these protectionist measures by the United States will only allow the Chinese government to devote more resources to the development of technology, thereby further reducing its reliance on US companies and eventually becoming the strongest competitor in the United States.
In addition, Huawei's layout in the 5G market has won a lot. Huawei had previously signed 25 memorandums of understanding with numerous telecom operators to try out 5G equipment. The signing targets include BT in the United Kingdom, Bell Telecom in Canada, Orange in France, Deutsche Telekom, and Vodafone, a global carrier.
Among these, the "absence" of U.S. companies is remarkable.
Huawei’s major competitors in the 5G era, Ericsson and Nokia, are not half as big as Huawei’s in terms of revenue and market share. However, the situation in the US market is embarrassing. The two competitors won 48% of the U.S. telecommunications equipment market, and Huawei’s market share in the U.S. is less than 1%. Behind this contrast, it is not difficult to see the United States’ ambition to curb Huawei’s development momentum.
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