Huawei is NOT a ‘paper tiger’

By: Claude Hatfield, American Enterprise institute

The Washington Post’s David Ignatius is an astute observer of international security issues. But his May 5 column, “Is Huawei a paper tiger?” presented an incomplete, flawed picture of the company’s competitiveness and the future course of international 5G wireless development.

Ignatius based his affirmative answer to this question essentially on two pieces of evidence. First, he pointed to a scathing assessment by the British National Cyber Security Center (part of the GCHQ) that found hundreds of defects in Huawei software engineering and noted that after notification in 2018 the company still had not fixed “major defects.” Ignatius labels the technology as “riddled with dangerous glitches,” but does not follow through in the implications of these years-old “glitches” from a company that in many evaluations has a portfolio of 5G products superior to those of its chief rivals, Ericsson and Nokia. As US intelligence officials pointed out at the time, it was quite likely that these “glitches” were calculated, in that Beijing and Huawei aimed to hide future malware or backdoors within supposedly flawed software.

More broadly, in competition for baseline 5G equipment, Huawei holds a commanding position over Ericsson and Nokia. (It should be noted that Samsung, while a late entrant, is a rising contender). While Ignatius puts Huawei’s share of the 5G market at about 45 percent, other estimates are lower, though still placing the company well ahead of its rivals. (Huawei does hold a large lead in developing regions such as Africa and South America).

In 2019, Huawei’s total revenue topped $120 billion, more than double that of Ericsson and Nokia combined. For years, it has poured 20 percent of its revenues back into research and development. After being exposed for a major theft of intellectual property from Cisco in 2003, the company built a large patent portfolio with which to defend its processes and products. And, backed by Beijing, Huawei and other Chinese telecoms companies are assiduously working to bend the international 5G standards process to their interests. In sum, discounting Huawei as an “inefficient . . . sloppy” competitor is belied by its relentless rise and current 5G position.

Ignatius’ second point is that a “new approach” to 5G development will soon replace Huawei technology and erode its dominant position. He is referencing the future emergence of open radio access networks (O-RAN), which will bypass current 5G hardware and build on advanced software technology. This open network architecture system has great promise, but as I’ve discussed previously, it represents a huge shift and faces large technical, regulatory, and financial challenges and obstacles. My AEI colleague Shane Tews has chronicled the benefits of moving to an open, interoperable O-RAN system. Furthermore, as I wrote earlier this spring, to date, the Trump administration has failed to develop a comprehensive national public strategy to supplement substantial private sector activity. Meanwhile, Huawei continues to lock companies and nations around the world into its 5G network hardware.

The bottom line is that while US leaders should be wary of “overestimating [Huawei’s] technological competence,” it would also be a dangerous delusion to underestimate that technological prowess.