What does Huawei’s decline show?

One of the biggest geopolitical developments of the last two years has been the quiet decline of Huawei Technologies Co In 2019, the Chinese telecommunications behemoth was racing toward dominance of the world’s 5G networks. It was a symbol of Beijing’s apparent rise to technological primacy. Today, however, Huawei isn’t thinking about supremacy: “Our aim is to survive,” its chairman has announced.
Since 2020, Huawei has been caught in the global blowback against Chinese belligerence. It has been pummeled by a US diplomatic and sanctions campaign. Barring an unexpected rescue, its prospects will worsen next year, when Huawei exhausts its limited supply of state-of-the-art semiconductors — the vital
components for modern electronics. For years, many experts believe, Huawei has been tightly linked to the Chinese Communist Party.
Now, it is becoming a casualty of America’s intensifying technological conflict with Beijing.
Huawei’s decline is instructive for several reasons. It shows how China is often its own worst enemy, as its global assertiveness makes its rivals multiply. It represents bipartisan effectiveness: President Joe Biden has prosecuted the assault against Huawei by refining policies that
President Donald Trump initiated with strong congressional support. Not least, it shows that the US has the tools, and can assemble the strategy, to win a high-tech rivalry with China — provided Washington can avoid losing crucial near-term battles first.
Huawei became a telecommunications giant thanks to a unique combination of advantages. It
received generous government subsidies, totaling perhaps $75 billion, which allowed it to develop quality products while undercutting its competitors’ prices. Unlike its foreign competitors, Huawei had unfettered access to China’s vast domestic market, which allowed it to operate at a scale that further drove down costs. And it benefitted from the political and diplomatic support of the Communist Party, which viewed 5G telecommunications as a critical arena in the struggle for global power — at a time when America was, one Trump-era official acknowledged, “asleep at the switch.”
By 2020, Huawei controlled 31% of the global telecommunications infrastructure market and had more contracts to build 5G networks than any other company. Its customers were not just cost-conscious developing countries: Roughly half of Huawei’s 91 contracts for 5G were in Europe, and even close US allies such as the UK had chosen to include Huawei’s gear in their networks. Meanwhile, the US response was fitful.
If Huawei built the world’s 5G networks, US
officials feared, Beijing could cite its National Intelligence Law to demand
access to sensitive information flowing through them. China would reap enormous geopolitical leverage, much as the UK had by dominating the world’s undersea communications cables in the late 19th and early 20th centuries.
Beijing’s vision of the future, in which advanced technologies turbocharge autocratic capitalism, would move closer to reality. And because 5G networks feature infrastructure that is costly and difficult to replace, countries that chose Huawei now might have to rely on its upgrades for years to come. “The race for 5G is on, and America must win,” Trump declared.
Huawei seemed to be running away with the
race to wire the world for the next generation. In fact, its fortunes were about
to fade.

—Bloomberg