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Markets slide as Panasonic joins list of firms walking away from Huawei Markets slide as Panasonic joins list of firms walking away from Huawei
(6 months later)
Panasonic has joined the growing list of companies to sever ties with Huawei by announcing that it will stop supplying some components to the Chinese technology conglomerate after a US ban over security concerns.Panasonic has joined the growing list of companies to sever ties with Huawei by announcing that it will stop supplying some components to the Chinese technology conglomerate after a US ban over security concerns.
The decision by the Japanese firm on Thursday sent Asia Pacific shares falling again and came a day after four major Japanese and British mobile carriers said they would delay releasing new Huawei handsets.The decision by the Japanese firm on Thursday sent Asia Pacific shares falling again and came a day after four major Japanese and British mobile carriers said they would delay releasing new Huawei handsets.
“We’ve stopped all business transactions with Huawei and its 68 group companies ... that are subject to the US government ban,” Joe Flynn, a Panasonic spokesman, said.“We’ve stopped all business transactions with Huawei and its 68 group companies ... that are subject to the US government ban,” Joe Flynn, a Panasonic spokesman, said.
Huawei is a Chinese telecoms company founded in 1987. US officials believe it poses a security risk because the Chinese government will make the firm engineer backdoors in its technology, through which information could be accessed by Beijing. Donald Trump has banned US companies from sharing technology with Huawei and has been putting pressure on other nations to follow suit. Fast-growing Huawei is arguably China’s first global multinational. The Shenzhen-based company makes mobile phones, base stations and the intelligent routers that facilitate communications around the world.
The UK has accepted there is some risk in working with Huawei, but security services do not believe it to be unmanageable. It has designated Huawei a “high-risk vendor”, but the company will be given the opportunity to build non-core elements of Britain’s 5G network. The head of MI5 recently said he was confident the US-UK intelligence-sharing relationship would not be affected if London gave Huawei the nod. But its success increasingly concerns the US, which argues Huawei is ultimately beholden to the Chinese Communist party and has the capability to engage in covert surveillance where its equipment is used.
Much of the doubt surrounding Huawei stems from founder Ren Zhengfei’s time as an engineer in the China's People’s Liberation Army from 1974-83. His daughter Meng Wanzhou, a senior Huawei executive, was arrested in Canada in December 2018 over allegations of Iran-sanctions violations. Huawei is by some distance the world’s largest supplier of telecoms equipment with an estimated 28% market share in 2019. It was also the second largest phone maker in 2019, after Samsung and ahead of Apple.
Huawei insists the Chinese government has never asked it to build a backdoor into its technology, and has offered to sign a “no spy agreement” with countries adopting it. The trade rivalry between the US and China has intensified in recent years and the firm believes the White House is simply using it as a weapon in that larger fight. But Australia banned Huawei from 5G in 2018, with its spy agencies declaring they were worried the company could shut down power networks and other parts of its infrastructure in a diplomatic crisis.
Kevin Rawlinson Trump banned US companies from working with Huawei last year and has strenuously lobbied others to follow suit, venting “apoplectic fury” in a phone call to Boris Johnson after the UK agreed to allow the Chinese company into 5G.
The company had successfully targeted the UK early on. It has supplied BT since 2003 and gradually expanded to the point where it agreed to create a special unit in Banbury, known as the Cell, where the spy agency GCHQ could review and monitor its software code. Vodafone is another key customer.
Britain’s intelligence agencies said in January that any Huawei risk could be managed as long as the company was not allowed to have a monopoly. As a result, Boris Johnson concluded Huawei’s market share should be capped at 35% for forthcoming high-speed 5G networks.
In July 2020 the UK position changed, and it was announced that Huawei is to be stripped out of Britain’s 5G phone networks by 2027. Oliver Dowden, the UK culture secretary, also announced that no new Huawei 5G kit can be bought after 31 December 2020 – but said that older 2G, 3G and 4G kit can remain until it is no longer needed.
Dan Sabbagh Defence and security editor
Panasonic joins Google, Intel, Qualcomm and Lumentum among the leading companies to turn their backs on Huawei in what is beginning to shape up as a tech cold war between the US and China.Panasonic joins Google, Intel, Qualcomm and Lumentum among the leading companies to turn their backs on Huawei in what is beginning to shape up as a tech cold war between the US and China.
The British company ARM Holdings, which licenses chip designs to Apple, Huawei, Qualcomm and Samsung among others, said on Wednesday it had halted relations with Huawei in order to comply with the US ban.The British company ARM Holdings, which licenses chip designs to Apple, Huawei, Qualcomm and Samsung among others, said on Wednesday it had halted relations with Huawei in order to comply with the US ban.
Washington has brought pressure to bear on businesses in friendly countries to follow suit. On Thursday it was reported that the US government was lobbying South Korea not to use Huawei products, a newspaper reported on Thursday.Washington has brought pressure to bear on businesses in friendly countries to follow suit. On Thursday it was reported that the US government was lobbying South Korea not to use Huawei products, a newspaper reported on Thursday.
In one incident, a US official said in a recent meeting with a South Korean counterpart that local telco LG Uplus, which uses Huawei’s equipment, should “not be allowed to serve in sensitive areas in South Korea”, Chosun Ilbo reported.In one incident, a US official said in a recent meeting with a South Korean counterpart that local telco LG Uplus, which uses Huawei’s equipment, should “not be allowed to serve in sensitive areas in South Korea”, Chosun Ilbo reported.
The official added that Huawei needed be eventually driven out of the country, if not immediately.The official added that Huawei needed be eventually driven out of the country, if not immediately.
It has also been reported that the Trump administration was considering Huawei-like sanctions on Chinese video surveillance firm Hikvision because of the country’s treatment of its Uighur Muslim minority.It has also been reported that the Trump administration was considering Huawei-like sanctions on Chinese video surveillance firm Hikvision because of the country’s treatment of its Uighur Muslim minority.
The worsening standoff between the two economic superpowers pushed Asia Pacfic shares to their lowest point in four months on Thursday.The worsening standoff between the two economic superpowers pushed Asia Pacfic shares to their lowest point in four months on Thursday.
Blue-chip stocks in Shanghai shed 1.5% in response to be near their lowest since February. MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.9% to reach its lowest in four months.Blue-chip stocks in Shanghai shed 1.5% in response to be near their lowest since February. MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.9% to reach its lowest in four months.
Japan’s Nikkei lost 1%, while South Korea shed 0.7%.Japan’s Nikkei lost 1%, while South Korea shed 0.7%.
“Both the US and China appear to be preparing for a prolonged period of trade conflict,” wrote analysts at Nomura in a note on the standoff.“Both the US and China appear to be preparing for a prolonged period of trade conflict,” wrote analysts at Nomura in a note on the standoff.
“We think domestic pressures and constraints will drive both sides towards further escalation,” they warned. “Without a clear way forward during an intensifying 2020 US presidential election, we see a rising risk that tariffs will remain in effect through end 2020.”“We think domestic pressures and constraints will drive both sides towards further escalation,” they warned. “Without a clear way forward during an intensifying 2020 US presidential election, we see a rising risk that tariffs will remain in effect through end 2020.”
Shares in Panasonic were down 1% on news that it was joining the US boycott.Shares in Panasonic were down 1% on news that it was joining the US boycott.
The company said its business with Huawei included the supply of “electronic parts,” but declined to provide further details.The company said its business with Huawei included the supply of “electronic parts,” but declined to provide further details.
Washington’s restrictions affect products made fully or partially in the United States, where Panasonic manufactures some of the components it supplies to Huawei, the Japanese firm said.Washington’s restrictions affect products made fully or partially in the United States, where Panasonic manufactures some of the components it supplies to Huawei, the Japanese firm said.
A Panasonic official declined to comment on what business the Japanese firm would continue to do with Huawei, though reports said the suspension would have a limited impact.A Panasonic official declined to comment on what business the Japanese firm would continue to do with Huawei, though reports said the suspension would have a limited impact.
Last week, US President Donald Trump declared a national emergency to bar US companies from using foreign telecoms equipment deemed a security risk.Last week, US President Donald Trump declared a national emergency to bar US companies from using foreign telecoms equipment deemed a security risk.
The move appeared aimed at Huawei, though the White House said no particular company or country was targeted.The move appeared aimed at Huawei, though the White House said no particular company or country was targeted.
US-China trade skirmishes obscure the start of tech cold warUS-China trade skirmishes obscure the start of tech cold war
In Britain, the telecoms company EE, which is owned by BT, was due to bring Huawei’s first 5G phone, the Huawei Mate 20X, to the country, but the Chinese firm’s involvement in the UK telecoms sector has become politically controversial.In Britain, the telecoms company EE, which is owned by BT, was due to bring Huawei’s first 5G phone, the Huawei Mate 20X, to the country, but the Chinese firm’s involvement in the UK telecoms sector has become politically controversial.
EE chief executive Marc Allera said the company had “paused” the launch of Huawei’s 5G phones “until we get the information and confidence and the long-term security that our customers... are going to be supported”.EE chief executive Marc Allera said the company had “paused” the launch of Huawei’s 5G phones “until we get the information and confidence and the long-term security that our customers... are going to be supported”.
The group also said it would phase out the use of Huawei equipment in the most sensitive “core” elements of its network infrastructure.The group also said it would phase out the use of Huawei equipment in the most sensitive “core” elements of its network infrastructure.
Vodafone soon followed suit, announcing a “temporary” suspension of pre-orders for Huawei handsets, “while uncertainty exists”.Vodafone soon followed suit, announcing a “temporary” suspension of pre-orders for Huawei handsets, “while uncertainty exists”.
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