Huawei used to be the second largest phone seller in the world after Samsung. Their revenues even tipped over $100 billion in sales. But that was back when they were still a supplier to USA. Now the relationship of Huawei with USA is officially over.
Serious Security Concerns Regarding Huawei with USA
Huawei used to supply USA with millions of devices annually. From supplying phones to tablets and laptops, Huawei had a very profitable relationship with USA. But then in 2018 things began to change. A serious political concern arose in regards to the security of USA and its citizens. With the products being manufactured in China, this could give the Chinese government access to potentially use Huawei’s products for surveillance on and in USA. This presented USA with a very serious security concern.
Even major companies like Google, AT&T and Best Buy started questioning the integrity of the relationship of Huawei with USA. Eventually they also started cancelling and stopping orders on their end.
Good Friends, But Not Best Friends
USA has been attempting to maintain a peaceful relationship with China for years. The reason is simple. It is very profitable for both countries. Over $400 billion worth of goods is imported to USA from China every year. This means that almost a 5th of all of USA’s imported goods come from China alone. For economic purposes maintaining a civil political relationship with China is very important for USA.
However, neither country agrees upon or approves much of the other’s values. USA is built and upheld by a federal democratic republic form of government. Meanwhile, China is a socialist republic that is governed the Chinese Communist Party. As a result, each country has very different opinions in regards to privacy rules, security rules and transactions and code set rules. This is why USA is wary about having China access to its mobile devices. The trust in the relationship does not extend that far. Even the FBI and CIA voiced their concerns strongly. Therefore, the relationship of Huawei (along with a few other Chinese firms) with USA was banned when former President Trump signed the executive order to add the company onto the blacklist back in May 2019.
The Current Situation
The ban did not just affect Huawei. It affected USA very much as well. In fact, the FCC estimated that it will cost USA over $1.8 billion to recover from the ban. Not only did the devices need to be removed, they also needed to be replaced.
This really hit the telecom companies especially hard. Replacing customers’ products with new products, while also trying to find a new manufacturer who can provide the new products was not small task.
The FCC recognized the difficulty that especially smaller telecom companies experienced during this transition period. So, on July 13 of this year the FCC decided with a unanimous voted to provide a $1.9 billion assistance program. This program would assist telecom companies who served 10 million customers or less. It would help provide them with at least some of the needed funds that it would take to replace the Chinese equipment with something a bit less concerning when it comes to matters of national and personal security.
Though Huawei was not the only Chinese telecom device supplier that USA banned, it certainly was the largest. Ending the relationship of Huawei with USA was very costly, but the peace of mind that USA gained with the decision was well worth it.
