The Huawei Problem: Disrupting The Global Supply Chain Over Unfounded Security Concerns

It’s no secret that the Trump administration and China aren’t on the best of terms. The trade war that began back in July 2018 seems like a distant memory when you consider everything that has happened since.

Separate from Tariffs and trade wars is Huawei, the world’s number one telecom supplier and second in the world of smartphones. The Trump administration believes the company to be a threat to national security and has taken no small amount of action in dismantling their access to U.S. suppliers.

The real question is this: are these drastic measure justified, and if so, are they worth destabilizing global supply chains over? To answer that, we need the look at the entire story.

Crackdowns on Huawei Reignite Tensions With China

While Huawei is known for manufacturing smartphones, a large portion of the company’s sizeable revenue comes from manufacturing telecommunications equipment.

Since May of 2019, Huawei has been unable to purchase chips directly from American companies without approval. Things escalated in May of 2020 when the Trump Administration announced that, in September of 2020, that companies will no longer be permitted to use American machinery or software in the production of chips for Huawei or its subsidiaries.

John Neuffer, president of the Semiconductor Industry Association, said that the group is concerned that this choice will “create uncertainty and disruption in the global semiconductor supply chain.”

As a result of this and prior decisions, Huawei has made efforts to mitigate the damage to their business. They’ve tried distancing themselves from American chip manufacturers, going so far as to create their own production unit titled HiSilicon.

Even this was not enough, however, as they still rely on outside manufacturers. To further protect themselves, Huawei has built up a 2-year stockpile of the most important chips from the U.S. as this new ban looms.

Security in 5G Networks: The True Motivation Behind Huawei Bans?

The argument behind the decisions to target Huawei specifically is rooted in national security fears. As part of Chinese law, organizations and citizens are required to support and cooperate with state intelligence work.

Given this, there are inherent fears that Huawei is controlled, at least partially, by the will of the Chinese government. Following this line of thinking, the Trump Administration believes that their technology represents a national security threat.

What if their 5G technology, used in various military applications, could have a backdoor that allows the Chinese government to spy on the U.S. or worse, intervene with the technology?

It’s not entirely outside the realm of reason, but Huawei is quick to denounce any and all accusations of this sort. In an interview with The Economist, Huawei’s CEO shared his thoughts, saying:

“I do not really understand America’s political motivation. 5G is just a type of technology or product. It is simply a tool. It would be a mistake to politicize 5G.”

Ren Zhengfei, Founder and CEO of Huawei

In the wake of accusations against the company, Huawei has denied all of these allegations and even gone so far as to share their code to prove there is no backdoor.

Various companies in the security space have unanimously reported that there is no built-in backdoor in Huawei’s equipment. That being said, there are some very clear vulnerabilities that are known and remain unaddressed. These types of things could be exploited without too much difficulty, but technical issues like these could also be mitigated with the right amount of effort.

Given this, the notion of a backdoor that threatens national security is a moot point, thereby unearthing the true motivation here: politics.

A large part of the motivation here comes out of the ongoing trade war with China. Striking a blow to a company like Huawei is sure to have a ripple effect on the Chinese economy and slow their technological progress.

Given the lack of a true security threat, beyond fixable vulnerabilities, it’s worth emphasizing that these kinds of decisions could have more widespread effects on the global supply chain.

As we continue to watch this story unfold, this is a stark reminder that supply chains should not be political in nature. They are global, complex, and equally necessary to all parts of the world.

When politics play a factor, decisions should not be made lightly, as one wrong move could cause unforeseen consequences across the industry.