Zhengfei Ren, the CEO and founder of Huawei has offered an olive branch to the Trump administration: License the Chinese telecommunications giant’s 5G technology to American companies, with the caveat that the U.S. government “the U.S. side has to accept us at some level for that to happen.”
Currently, the use of Huawei equipment is banned from U.S. networks over concerns that it could be used by the Chinese government as a method to spy or disrupt telecom systems.
The offer, which was reported earlier this week by New York Times columnist Thomas Friedman, would essentially allow the U.S. to finally get in the race for 5G supremacy which is now dominated by Chinese Huawei and ZTE, Ericsson of Sweden and Nokia from Finland. Note: Whether
“Huawei is open to sharing our 5G technologies and techniques with U.S. companies, so that they can build up their own 5G industry. That would create a balanced situation between China, the U.S. and Europe,” told Ren to the newspaper.
I reached out to Huawei’s communications team who confirmed Ren’s offer.
Moreover, Ren added that the U.S. companies would be allowed to modify as they see fit the software code used to run any of Huawei’s 5G equipment or even change it and use their own. Though this does not guarantee security against back doors, the implication is that this should allay fears that the Chinese company might be able to access these licensed American made 5G telecommunications gears to spy for the Chinese government. Further, the Chinese government would have to approve the deal.
Ren added that the American licensees will be able to sell their 5G equipment based on Huawei’s intellectual property anywhere in the world, except in China.
Atherton Research Insights
The CEO’s offer of licensing Huawei’s crown jewels—5G will be the core technology used in all of the world’s telecommunications infrastructure for at least the next decade—came as a shock, both outside but also inside the world’s largest maker of 5G networking equipment.
Our sources close to the firm confirmed to us that Ren’s announcement was news to the entire company, headquartered in Shenzhen, China.
On the technology side—although there are many political ramifications to this, including the fact that the Chinese government might not like to see the most valuable assets of its most valuable tech company land in U.S. hands, my goal here is to discuss the impact this olive branch will have on the technology sector— this could be the one-time opportunity to make the U.S. a telecommunications powerhouse again and get back and win the 5G race.
Today, there is no American 5G equipment maker.
Lucent, which used to be part of A&T, was the last U.S. manufacturer of telecommunications equipment and is now part of Nokia, after the Finnish company completed the acquisition of Alcatel-Lucent three years ago, on November 2016.
And Qualcomm is only making 5G modems and antennas for smartphones and is not building any telecommunications equipment.
Although a company like Cisco—which already competes with Huawei in the enterprise and service provider networking market—would be a great candidate for this deal, smaller equipment makers including Arista, Juniper or a Silicon Valley startup could grab this opportunity to build the next U.S. telecommunications giant that could compete and win against Ericsson, Nokia and Huawei!