The arrest of Chief Financial Officer of Chinese mobile and mobile technology company Huawei in Canada marks a new stage in a technological cold war between Western spy agencies and Beijing. This development could be catastrophic for Huawei: the US allegedly alleged that sanctions were violated by the sale of telecommunications equipment to Iran. If proven, the answer could exclude Huawei from many of the world's most valuable markets.
This quiet word war had already begun this week when British Intelligence Chief Alex Younger said a speech "we need a conversation" about Huawei's involvement in the UK telecommunications network. On Wednesday, BT announced that the Huawei kit will be canceled by parts of the EE mobile network.
Huawei has been the world's largest provider of telecommunications networking equipment since 2015, ahead of European competitors Ericsson and Nokia and well ahead of domestic competitors ZTE and South Korea's Samsung.
However, the company has fought for years against the suspicion that it has subjected itself to pressure from the Chinese government to open up or disrupt telecommunications systems abroad. For this reason, it has been banned to sell its viable network equipment to the United States, Australia and New Zealand – three of the five-eyed countries where the intelligence services are split (the other two are Britain and Canada).
But Meng Wanzhou The arrest of a federal command in Canada is a dramatic escalation. She is not only CFO and vice president of one of the world's largest manufacturers of telecommunications network equipment essential for telephone, smartphone and Internet traffic. She is also the daughter of 74-year-old founder of Huawei, Ren Zhengfei. Ren was suspected by Western agencies because of his role in the IT department for the Red Army before its formation in 1987.
The latest developments are reflected in a climate of growing mistrust and mistrust of Chinese technology and equipment. The discovery that some smartphone phones are sending Western user data to servers in China raised eyebrows in 2016. Increasingly, the question arises, which hidden functions could be built into systems. A dramatic Bloomberg story in October claimed that China has built surveillance chips into servers used by Apple and Amazon. This has been severely rejected by companies, but this leads to a narrative in which China's dominance in the technology sector of intelligence services is considered a risk for countries that rely completely on telecommunications networks United States build against Huawei. The industry already knows how serious this can be: in May, the Trump government imposed a ban on ZTE for failing to sell any equipment to Iran. The ban prevented a US company selling its equipment to ZTE – and essentially throttling it as it relied on US-designed chips. At the same time, the UK's National Cybersecurity Center, which relies on the expertise of the government's GCHQ spy center, warned against deploying ZTE devices in UK networks on the grounds that "national security risks can not be mitigated". ZTE crashed in the quarter on a billion loss.
The US has long suspected that Huawei was also involved in a sanctions violation. Internal documents confiscated by ZTE when sanctions were imposed on sanctions showed that it knew of another Chinese company code-named F7, and did so by founding cut-out companies to which it applied Would sell equipment. This would then be resold to the sanctioned country. In one crucial passage, a ZTE document states: "F7's proposal to acquire a US 3leaf company was rejected by the US government." In 2010, Huawei attempted to acquire 3leaf – but resigned after an opposition from the US government's Business Today email or follow Guardian Business on Twitter at @BusinessDesk
Asked whether it was the company designated as F7 in the ZTE document, Huawei said, "Huawei will comply with all applicable laws and regulations in which it operates, including applicable export control and sanction laws and regulations the UN, the US and the EU.
If the US can prove that Huawei has broken the Obama era sanctions on Iran, it could trigger a run on prohibition against the company. If it were forbidden to receive American parts like ZTE, the smartphone business, the second largest in the world behind Samsung, would come to a standstill. It may already be preparing for such an eventuality. It makes its own smartphone chips, but continues to rely on Google's Android software. It has recently become known that it is working on its own alternative operating system for mobile phones. John Delaney, a mobile systems analyst at IDC, says that would be reasonable: "The hostility of the US government to Huawei means that Google may be banned from licensing Android to the company."
After the developments this week, Huawei's view is increasingly isolated-looking.