Fearing spyware and security breaches, the United States has declined to do business with Chinese telecom giant, Huawei. Whether or not other countries follow suit, this decision is having a major ripple effect across the industry, reports the Daily Cambridge.
In a recent decision, the U.S. determined that it would not allow American microchip technology to power Huawei smartphone or network equipment. Many countries in Europe and around the world have entrenched relationships with the Chinese vendor. 5G development, and existing networks that use Huawei components could be severely crippled by the severing of those ties, analysts warn.
“There are stockpiles that will allow business to continue for a few months, and U.S. policies may change, but if Huawei is unable to deliver, this constitutes a significant economic risk to its customers,” said Janka Oertel, senior policy fellow at the European Council on Foreign Relations think tank. Oertel adds that there could be “significant implications for all of [Huawei’s] customers, including in Europe and particularly in Germany especially in the realm of 5G technology.”
Huawei responded that “it’s still too early to determine what, if any, impact this will have on our supply chain,” adding a warning that “ultimately it is Europe’s and the world’s consumers who will suffer.”
Deutsche Telekom had the foresight to make a deal with Huawei last year and can claim priority access to equipment needed to keep its networks operating. Other telecoms will need to determine whether to move ahead with Huawei and hope for the best, or make plans to switch to more accessible vendors. The Daily Cambridge speculates that decisions may be postponed until after the U.S. election.