BEIJING (dpa-AFX) - The Trump administration recently put Chinese telecom giant Huawei Technologies Co. and seventy affiliates on its 'Entity List,' that bans Huawei from buying components and technology from U.S. firms without prior approval from the government.
The U.S. has serious concerns about the security risks posed by Chinese technology companies, including Huawei and ZTE. Intelligence agencies are concerned that Huawei and other Chinese companies may be beholden to the Chinese government or the ruling Communist Party, raising the risk of espionage.
The Trump administration's ban on Huawei, based on national security concerns, is primarily aimed at keeping equipment made by the Chinese company out of the next generation of wireless network, 5G.
Huawei, the world's largest telecom-equipment maker, and ZTE are now major players in the 5G market as they manufacture and sell telecom equipment for 5G networks at competitive prices.
Replacing the equipment made by these companies with higher-priced alternatives could cost the telecom industry billions of dollars and take many years. Needless to say, the ban on Huawei will create losers on both sides as tech companies depend on each other for crucial components required in their products.
Nevertheless, the exclusion of Huawei may benefit some technology companies in the short term.
Huawei's main rivals in providing 5G network solutions are Sweden's Ericsson (ERIC), Finland's Nokia Corp. (NOK) and South Korea's Samsung Electronics Co. (SMSN.L, SSNNF.OB, SSNLF.OB). These companies could benefit as they are capable of supplying full-scale 5G network solutions.
Other major components such as chipsets are provided by U.S. companies such as Broadcom Inc. (AVGO), Qualcomm Inc. (QCOM), Intel Corp. (INTC) and Cisco Systems Inc. (CSCO).
Huawei is also a major maker of optical equipment. Here, its rivals such as Ciena Corp. (CIEN) and Nokia could take advantage of the situation.
Juniper Networks Inc. (JNPR) and Cisco also are poised to reap the benefits from Huawei's ban in the router market.
Copyright RTT News/dpa-AFX
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