Production of Huawei's 5G networking equipment unaffected by the coronavirus
Getting banned from its U.S. supply chain didn't kill Huawei and the company still managed to deliver approximately 240 million handsets last year. While it wasn't enough for the company to top Samsung, it did finish in second place ahead of Apple. While the Trump administration couldn't shut down Huawei (and the U.S.does have something else up its sleeve in an attempt to damage the company), neither could the deadly pandemic known as the coronavirus.
According to Reuters, Huawei announced today that its factories are once again humming as the production of its 5G networking equipment has resumed. The company manufactures 5G networking gear at its own factories. In London today, the president of Huawei's 5G networking equipment, Yang Chaobin, said in scattered English, "Since the outbreak of the virus it’s been some time and actually all Huawei’s own factories have resumed production, and currently the 5G equipment is manufactured in Huawei’s own factories. The major suppliers have resumed production as well, so there’s no impact at all to the supply to our customers."
The U.S. would love to prop up Huawei rivals like Nokia and Ericsson
Huawei's 5G networking equipment is constantly on the mind of U.S. officials concerned about the firm's ties to the communist Chinese government. The worry is that under the laws in the country, the Chinese government can demand that Huawei gather intelligence on its behalf. To do this, lawmakers in the states say that Huawei's networking equipment contains back doors that collect information and send it to Beijing. If we had a nickel for every time that the U.S. has made this claim, and a nickel for every denial uttered by a Huawei official, we'd be as wealthy as Jeff Bezos.
Meanwhile, the U.S. has been feverishly working to come up with a plan that would help Huawei rivals Nokia and Ericsson grab some business away from the Chinese manufacturer. But Huawei is the largest networking equipment manufacturer in the world with a 28% share and has a one to two year technological lead over the two Scandinavian firms. In addition, Huawei's ties to China's state-run bank allow it to offer generous financing terms to clients.
Some of the ideas that the U.S. has come up with include providing Nokia and Ericsson with cheap money so that they too can offer generous financing terms for their equipment. Another idea floated by Attorney General William Barr called for the U.S. to acquire a controlling stake in the two networking firms, but that trial balloon was quickly shot down by Vice President Mike Pence.
A couple of weeks ago, White House economic adviser Lawrence Kudlow discussed the possibility of replacing some of Huawei's hardware with software. Kudlow told a television audience that "Dell and Microsoft are now moving very rapidly to develop software and cloud capabilities that will, in fact, replace a lot of the equipment." The adviser explained that "The big-picture concept is to have all of the U.S. 5G architecture and infrastructure done by American firms, principally. That also could include Nokia and Ericsson because they have big U.S. presences." Last year, the Trump administration reportedly met with American networking firms Cisco and Oracle in an effort to have them compete against Huawei. Both companies rejected the idea responding that it would take too much money and time to start up.
The U.S. has been pleading with its allies not to use Huawei's gear when building out their 5G networks. Australia and Japan have followed this warning while Germany and Britain haven't. While British Prime Minister Boris Johnson has basically shrugged his shoulders and asked, "what are the alternatives?" Britain did say that it will keep Huawei parts away from "sensitive areas" of the network.
If American officials were hoping that the coronavirus would give other companies an opportunity to take business away from Huawei, this doesn't appear to be in the cards.