Newsletter
Huawei is pleading with the U.S. President Joe Biden to have a conversation. Vincent Peng is also urging a shift to software in a bid to counter America’s sanctions. Peng is the company’s senior vice president and member of the company’s board.
The Trump administrations added Huawei Technologies to a blacklist. The move restricted American companies from selling the tech components Huawei needs to make their products such as smartphones.
Last year, Huawei was blocked from buying chips from TSMC (Taiwan Semiconductor Manufacturing Co.). This Taiwanese company uses various equipment from American companies to make chips.
U.S. Government considers Huawei a security threat
The U.S. government believes that Huawei could be forced to launch cyberattacks on the nation’s telecommunications networks because Huawei is a Chinese company. Moreover, it can enable Beijing to engage in spying activities in the United States.
U.S. President Joe Biden signed an executive order earlier this month to strengthen the country’s cyber defense. The move came after a ransomware attack that shut down the nation’s biggest fuel pipeline for several days.
U.S. government agencies and private companies came under attack in 2020. This attack was carried out by an IT company called Solar Winds and Microsoft Exchange.
If Biden’s executive order encourages the U.S. government to take a fact-based approach to cybersecurity, that will be highly beneficial.
The order is likely to benefit the U.S. as well as China, according to Nikkei Asia. This is possible if the order eliminates the continuing slide toward protectionism and renews American acceptance of global competition.
The impact of Joe Biden’s executive order on Huawei
Huawei is hoping that the Biden administration takes competition into account. As a result, U.S. and Chinese companies will be able to continue strengthening their interlinked economies.
However, if U.S. President Joe Biden follows in the footsteps of Donal Trump and permits competition only when it coincides with the country’s political aims, the global economy will extend its rush into economic and technological decoupling.
Splitting America’s supply chains from China will have a bad impact on Huawei and other Chinese companies. However, decoupling is expected to cost the U.S. an estimated $190 billion in terms of lost GDP, according to U.S. research outfit The Rhodium Group.
Economist Intelligence Unit suggests that a full decoupling of trade between China, the U.S., the U.K., New Zealand, Canada, and Australia would cost the global economy over $50 trillion. Moreover, the U.S. government’s National Intelligence Council suggests splitting the world into multiple security and economic blocs will lead to extraordinary costs.
Huawei CEO wants Joe Biden to reconsider Huawei’s offer
The U.S. government’s beef is with China, not with Huawei. The Biden administration has adopted a more multilateral approach to the world as compared to the Trump administration.
This is likely to bring a change in how the U.S. government treats Huawei and other companies based outside of the United States. Huawei is hoping that the administration will talk to them.
The company is willing to be subject to the most stringent controls to ease the U.S. government’s concerns about Huawei products and technologies. Huawei is even ready to open up manufacturing operations in the United States.
Aside from that, the administration may want to reconsider Huawei CEO and founder Ren Zhengfei’s offer to license Huawei’s 5G technology to an American company. The agreement could include all or part of the company’s 5G patent portfolio such as hardware designs, technologies, software source code related to testing, network planning, and manufacturing.