Monday, 24 June 2019 09:05

US 5G equipment move 'could hit' Nokia, Ericsson operations Featured

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US 5G equipment move 'could hit' Nokia, Ericsson operations Image by mohamed Hassan from Pixabay

Telecommunications equipment vendors Nokia and Ericsson may be forced to move a good part of their operations out of China if a proposed move by the US, to make it mandatory that an 5G equipment used within the country be designed and made outside China, comes into force.

A report in The Wall Street Journal on Sunday cited "people familiar with the matter" as saying that the government was considering just such a move, following an executive order from US President Donald Trump to ban the use of networking equipment from China due to cyber security worries.

Trump's executive order was issued on 16 May and banned the the use of equipment from Chinese telecommunications vendors Huawei Technologies and ZTE Corporation.

The order gave the government the power to block companies from purchasing equipment from foreign firms who are deemed to be a national security risk. It also gave the secretary of commerce the authority to decide the transactions that include possible risk.

The WSJ report said a 150-day review of the telecommunications chain had begun on the same day the order was issued, asking equipment makers if they could design and deliver all components needed for a 5G network from facilities outside China.

The 150 days would end in October and since the order has asked for proposals on rules and regulations, it could take years to adopt, the same sources indicated.

There are no American companies that can manufacture the whole range of equipment needed for a 5G network. The one big company in this line, Lucent Technologies, was merged with France's Alcatel in 2006 to form Alcatel-Lucent which was absorbed by Nokia in 2016.

The US and China are involved in a tit-for-tat trade dispute and news of this move may well ratchet up tensions further. Trump and Chinese President Xi Jinping are expected to meet during the G-20 leaders' summit towards the end of this month, but there are no indications that it will lead to any lessening of tensions.

The US Government has also taken other steps that have got China riled up. On 16 May, the government placed Huawei and 68 of its affiliates on its Entity List, meaning that the company would have to seek permission to purchase any American components it needed to manufacture its products.

Four days later, Google announced it was cutting off Huawei's access to future updates of Google's Android and Google Play Store.

On 21 May, the US Commerce Department eased some of the restrictions until August, allowing Huawei to maintain and update existing networks and handsets.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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