Will the US indictments kill off Huawei? Of course not …

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Image credit: James Mattil / Shutterstock.com

You know by now that the US government has officially indicted Huawei on 23 charges covering obstruction of justice, wire fraud and theft of trade secrets. And a number of people inside and outside the telecoms industry have asked me two questions about this latest turn of events:

  1. Are the charges against Huawei politically motivated?
  2. Is Huawei is ultimately doomed?

In my opinion, the short answers are:

  1. Probably.
  2. Ha ha. No.

The longer answers (with the caveat that I’m a tech journalist, not a lawyer) go something like this:

Are the charges against Huawei politically motivated?

Honestly, I would be surprised if they weren’t.

That’s not to say that the charges are bogus. Whatever you may personally think of the US Department of Justice (DoJ), it is generally not in the habit of wasting everyone’s time by bringing forward a case with flimsy evidence that would fall apart at the slightest cross-examination.

That said, the fact that the indictments may be based on real evidence doesn’t mean they’re not politically motivated – at least in regard to the timing. I confess it’s difficult for me to evaluate the indictments outside of the context of the current US-China trade war, to say nothing of the US’ general vendetta against Huawei as a perceived threat to losing a 5G race that only exists in the minds of government officials who think everything is a zero-sum game.

It would be a most remarkable coincidence if the DoJ just happened to have enough evidence – which it has been gathering for over a decade, according to the South China Morning Post – to indict Huawei at a time when the US is not only barring Huawei from as much US business as possible, but is actively encouraging its allies to do the same.

It’s also perhaps notable that  the US wasn’t content to simply pursue the alleged Iran sanctions violations case – they also threw in the T-Mobile industrial espionage case for good measure, even though that case was already settled out of court in civil proceedings years ago.

Obviously I’m only guessing, but I get the feeling the T-Mobile case was only added in part to reinforce the overarching US narrative that Huawei is sneaky and untrustworthy and will steal what it can from you, and that’s why we’ve been telling you all along not to buy their 5G gear because who knows what they’ll do with it once it’s in your network.

Speaking of 5G, it’s also worth noting that none of these charges involve Huawei exploiting its installed network gear to harvest US data and beam it to Beijing for espionage purposes – which is the core national-security concern regarding Huawei’s 5G equipment. At most you have an alleged attempt to copy plans for T-Mobile’s super-secret mobile testing robot Tappy. And no Huawei networking gear was involved in that.

Is Huawei is ultimately doomed?

At this stage, any talk about Huawei being finished as a company is nonsense. Or wishful thinking, depending who’s doing the talking.

In terms of the indictments, normally in cases like this, the worst-case scenario for the accused company is heavy fines (which Huawei can afford, financially) and plea deals for the scapegoats. The wild card in a plea-deal scenario is Huawei CFO Meng Wanzhou, who happens to be the daughter of company founder Ren Zhengfei. Huawei may choose to fight in court to prove her innocence rather than cop a plea. Also, a rogue-employee defense could be undermined by the fact that the indictment alleges that Huawei’s T-Mobile shenanigans were backed by company policy (which may be indeed why they added it to the indictment list in the first place).

But for now, I don’t see an outcome that will shut Huawei down forever. The exception might be if Huawei might face a US components ban similar to the one that forced ZTE to shut down for a few months. ZTE is back in business, and Huawei might be in a better position than ZTE was to withstand a ban. According to GB Times, Huawei’s 150 global “core” suppliers list includes 33 US companies. On the other hand, that leaves another 117 core suppliers. So it’s possible Huawei has the time and the partnerships to find a workaround if it needs one.

The remaining question is how much business Huawei might lose over this. Personally I don’t think they’ll lose enough to kill off the company. To be sure, even before the indictments, Huawei was already losing some 5G contracts, and they may lose some more, but I think that will be a temporary setback at most.

Remember that Huawei will be selling a lot of 5G equipment domestically as China ramps up 5G rollouts – and 5G is just one product line in the company’s vast portfolio. At most, Huawei will probably have to go to extra efforts to work with operators and regulators to ensure them that their gear is safe to use (and by “extra efforts” I mean serious deep-dive third-party evaluations), which they should be doing anyway.

So all up, Huawei may be facing a relatively difficult 2019, but I will bet real money that the company will be around long after the current US presidential administration is gone.

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