US has strength in battle against China, Huawei

New US sanctions against the Chinese telecom giant Huawei are beginning to bite hard, with a British assessment predicting that the firm may begin running out of complex, US-designed semiconductors and other gear during the next year. The shortage could devastate parts of its business.
The Huawei battle is the leading edge of a broad US campaign against Chinese efforts to control key technology sectors, such as the 5G telecom market that Huawei now dominates. US and Chinese analysts have warned in interviews that this technology conflict is leading to a decoupling of the global tech market that might leave both nations worse off.
Washington is playing a stronger hand in this tech competition than some analysts have realised. US companies still control the commanding heights, even after rapid Chinese advances.
As a result, America’s ability to constrain China, at least in the near term, is greater than generally appreciated.
“In a decoupled world, we’ll do better than the Chinese can,” contended a senior Trump administration official in an interview. “There’s a lot of defeatism around about the US technology position. People don’t understand the enormous technology advantage we have.”
The administration’s upbeat assessment of America’s strong position against Huawei is confirmed by details in the new UK government report. The British explain that by expanding in May its “Entity List” designation of Huawei, the United States can now prevent sales not only of technology produced by US companies but also the transfer of systems produced by global companies that depend on US technology or software.
“Designing and building equipment largely independent of US technology or tools within a couple of years presents a truly Herculean task,” argued an unclassified analysis by Britain’s National Cyber Security center, a unit of
its communications intelligence agency, known as GCHQ.
Because Huawei depends on semiconductors and chips made by US fabrication technology, “our estimate is that Huawei’s supply will be impacted within the next 3-12 months,” the report noted. Even if Huawei rushed to build its own alternatives, that process would take several years, and the hardware and software would be unreliable.
“The equipment will have been built with unknown and untested tools, created under extreme time pressures. It is highly likely that the quality issues . . . will increase significantly,” the British report notes.
“It will be extremely challenging to gain confidence in Huawei’s post-sanction equipment, and it may be impossible.”
The British findings are important, because the UK government has been wary of the Trump administration’s push against Huawei and had sought, until now, to preserve the option of keeping Huawei as a 5G supplier.
The Huawei confrontation comes at a time when both Beijing and Washington are flexing their muscles in contested areas. The Chinese suspension of human-rights laws in Hong Kong and US reprisals are one example; another is both sides’ assertion of naval power in the South China Sea.
US and British officials describe a similar set of challenges to replace a newly constrained and unreliable Huawei as a 5G supplier.
In the short run, they hope to bolster alternative European telecom suppliers Nokia and Ericsson; in the medium term, they hope Asian companies such as South Korea’s Samsung and Japan’s Fujitsu and NEC will enter the 5G market aggressively.
Over the long run, US and British officials predict that Huawei’s 5G technology will be disrupted by new software-driven systems, such as Open Radio Access Networks, or O-RAN. The senior administration official expressed confidence that the US and its tech allies will prevail on this front, arguing that “China doesn’t hold
a candle to us in software development.”
America and its allies also have vulnerabilities. Beijing signalled that it might retaliate by sanctioning Nokia and Ericsson, which depend on some Chinese components. Officials fear that China could try to “liberate” some of the technology Huawei needs by stealing intellectual property or even by seizing plants in Taiwan that fabricate US-designed chips.
Any military or covert effort to control the raw materials of this tech war could backfire for China, though. The fabrication plants in Taiwan might not survive intact. And Taiwanese scientists might flee to refuge in America, much as German scientists did after World War II.
A battle in the tech sector is inherently dangerous, like wrestling over a ball made of glass. A Chinese diplomat in Europe recently offered a menacing warning: “We treat our friends with fine wine, but for our enemies we have shotguns.”
Tough talk. But in the Huawei fight, it turns out, the heavy weapons seem to be on the American side.

—The Washington Post

David Ignatius is an American journalist and novelist.
He is an associate editor and columnist for The Washington Post