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Huawei stresses there is no threat to existing UK supply commitments

With Huawei’s fate looking increasingly fragile as the US attempts to chop and chip at its supply chain, the vendor has stated it has the stockpile and capacity to meet all existing commercial contracts.

Jamie Davies

July 8, 2020

3 Min Read
Huawei stresses there is no threat to existing UK supply commitments

With Huawei’s fate looking increasingly fragile as the US attempts to chop and chip at its supply chain, the vendor has stated it has the stockpile and capacity to meet all existing commercial contracts.

The US has attempted to inhibit Huawei’s ability to source key components for telecoms and consumer products, and it does appear to have been a successful venture.

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest semiconductor foundry, has stopped taking orders from the Chinese vendor, while the National Cyber Security Centre (NCSC) in the UK has launched a consultation to understand what impact US sanctions would have on Huawei’s ability to be a reliable and resilient supplier to UK telecoms operators.

After months of prodding and probing defences, it seems bureaucratic assaults have found a weak spot in the Huawei armour. Now Huawei has to prove to authorities its supply chain has not been compromised and that it is a viable supplier to 5G ecosystems.

Today (July 8), Huawei VP Victor Zhang has attempted to reassure the UK, putting forward a message of confidence in the under-fire firm.

“We will work to find a solution to any restrictions the US imposes on us,” Zhang said on a media call.

There were two key takeaways from the call. Firstly, Huawei is stressing the consultation and the facts to understand the impact on the vendor’s supply chain will take months. Conclusions are nothing more than predictions currently, and no irreversible decision should be made without evidence on hand.

“It is too early to assess the impact and premature to make a decision on the ability to deliver next generation connectivity across the UK,” Zhang said.

Huawei is urging telecoms customers and political decision makers not to make a knee-jerk reaction. The firm is effectively asking for decision makers to cool the engines and consider the evidence which will emerge over the coming months, presumably as Huawei reorganises its supply chain to protect itself from US action.

The second point is that Huawei has the ability to meet the demands of existing contracts. Any impact from these restrictions and bans would be realised in the long-term, but any commercial relationship which is in place today can be honoured, Huawei claims. Through stockpiling of key components and products, through to in-built resiliency in its supply chain, there is no threat to today’s operations.

While this is a perfectly reasonable position to take, the issue is focused on on-going support. Backwards compatibility is an issue today and it would remain an issue in the future. Even if significant strides forward are made in the OpenRAN ecosystem, products and components already in the network, and equipment which will be put into the network in the near future, are not compliant with OpenRAN specifications.

Interoperability is quickly emerging as one of the biggest talking points in the telecoms industry, especially as more progress is made in the OpenRAN ecosystem. Therefore, while Huawei is perfectly valid in suggesting there is no immediate concern to telecoms operations or networks, a long-term negative impact on Huawei is an element which will have to be scrutinised deeply today.

Although the current consultation from the NCSC is not directly focused on the Telecoms Supply Chain Review, the result of this probe will have a direct impact on it. Unless the NCSC suggests there is no material impact to the resiliency of Huawei’s supply chain, it is becoming increasingly clear the outcome of the Telecoms Supply Chain Review will be revisited.

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