Why is Huawei in the news?
Its chief financial officer, Meng Wanzhou, who is also the daughter of the company’s founder, was arrested in Canada on 1 December and faces extradition to the US over allegations of helping evade sanctions against Iran. The Obama-era sanctions banned the sales of certain telephone-system equipment.
What does Huawei do?
It is the world’s biggest telecoms equipment supplier, with 2017 revenues of 603bn yuan (£67.7bn) and profits of 47.4bn yuan (£5.3bn). One part of it makes the networking equipment that makes mobile phone masts work, the network switches that connect phone networks and the software to control them. Since 2015, it has outsold Ericsson and Nokia, its two main rivals, and is far bigger than ZTE (another Chinese company) or South Korea’s Samsung, which also challenge in that space. It’s also one of the world’s three largest smartphone vendors, vying with Apple for second place, which it has held for the past two quarters.
Where is its equipment used?
Its network equipment is used almost everywhere – but not in the US, which has banned its 5G kit. Australia and New Zealand are taking similar moves, decreeing that it cannot be used in 5G networks. In the UK, BT uses Huawei systems extensively, though not in its central network.
Is the Meng arrest connected to the US’s trade war with China?
No. The arrest seems to be connected to the alleged sale of Huawei equipment in Iran, breaking US sanctions. American suspicions of sales being made via intermediary companies were raised in 2016, after documents from ZTE came to light. Those talked about a company codenamed “F7” which, like ZTE, was selling equipment to sanctioned countries including Syria, North Korea, Cuba and Iran. Other details in the documents point to “F7” being Huawei.
What does Huawei say about F7 and claims it broke sanctions?
Huawei says it “complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, US and EU”.
Are sanctions the only bad news?
There are storm clouds elsewhere. In the UK alone, BT is removing Huawei systems from the core of the mobile network EE, which it purchased in 2016. And the head of MI6, Alex Younger, said last week that the UK needs to decide “the extent to which we are going to be comfortable” with Chinese companies owning technologies such as the forthcoming super-fast 5G networks. The concern is that letting foreign companies install and in effect control infrastructure via software would make an attack possible at a time of heightened tension.
Have hostile infrastructure attacks ever happened?
In December 2015 Ukraine suffered a huge power outage affecting 230,000 people due to a cyber-attack on its power stations, sown via targeted phishing emails that broke into their computers; Russia has been blamed. In 2015 and 2016 state hackers working for North Korea stole millions of dollars by breaking into the Swift electronic banking system in Bangladesh.
Why are countries so concerned?
The fear is that Huawei may have built in a “backdoor” to its network software (or could be compelled to) that would allow covert surveillance or control – or even destruction – of phone networks, which are by their nature accessible via the internet. So if Huawei equipment were used, the only protection would be to ensure the software that runs the network was secure.
How can you check that its software is secure?
Since 2010, in an arrangement with BT, Huawei has provided an office in Oxfordshire called “The Cell” where its code can be checked by a team including GCHQ experts. But recently The Cell has come in for criticism because it’s not possible to be certain that Huawei loads the same code on to the machines it deploys elsewhere. “The code you audit might work OK, but how do you know that what’s evaluated is what ends up in the BT network?” Professor Alan Woodward of the University of Surrey told the BBC last week. The worst-case scenario was “espionage or disruption via a back door”, he added.
What does Huawei say about these concerns?
Huawei has repeatedly said such fears are overblown, that it complies with local laws and that it would not hand over user data to China. Its Australian chairman, John Lord, said an order to hand over user data to the Chinese government would be “completely illegal” and fumed at Huawei being blocked from the 5G network, calling it “short-term and small-minded”.