Why Huawei's days in the UK could be numbered

BBC Technology 25 Jun 2020 11:15
By Leo Kelion Technology desk editor
Huawei dossier

The UK government is inching towards taking a decision on Huawei's role in the UK's 5G and fixed-broadband networks.

The National Cyber Security Centre (NCSC) - a branch of the intelligence service GCHQ - has documented all the facts ahead of giving its view.

And civil servants at the Department for Digital, Culture, Media and Sport (DCMS) are weighing up the financial consequences of ordering a ban or new limits.

In theory, a decision could come as soon as next week but it is likely to take a bit longer.

Those following developments would be forgiven for having a sense of deja vu.

It was only in January that the UK government announced, following a lengthy review, that the Chinese firm could continue to provide equipment and expertise to the UK networks, albeit with a new cap on its market share.

Washington has continued to assert that Huawei poses a national security risk - most recently claiming it is either backed or owned by the Chinese military - something the firm denies.

But it is not this, but rather the threat of new US sanctions, that might change the UK's course.

To understand why, one needs to become acquainted with a little-reported side to the tech industry.

When Huawei announced its flagship Kirin 990 5G chip last year, it boasted "over 10 billion transistors are condensed in this tiny chipset".

Instead, the semiconductor industry relies on a type of software known as electronic design automation (EDA).

"It's theoretically possible to manually design today's chips, but it's extremely difficult and would take a long time," explains Jim Tully, an independent industry analyst.

"And the software is also used to simulate the chip working, because once you put it into the manufacturing process it is extremely expensive."

The problem for Huawei is that the three leading EDA software-makers all have ties to the US. And the sanctions forbid the Chinese firm and the third parties that manufacture its chips from using "US technology and software to design and manufacture" its products.

That effectively locks Huawei out from the equipment needed to print the smallest-sized transistors currently possible, which in turn limits how efficiently its products can run.

So, while Huawei could try to skirt round the sanctions by shifting its business to China's predominant foundry - Shanghai-based Semiconductor Manufacturing International Corp (SMIC) - that company, too, needs to obey the US rules or would face consequences of its own that might threaten its wider business.

There have been reports that Huawei hopes to weather the storm by drawing on a stockpile of chips it has built up before the sanctions bite.

But UK ministers may decide that it is just too risky for the country's telecoms infrastructure to be reliant on a company that might not be able to provide its own components and would have to fall back on others from as yet unknown suppliers.

When the sanctions were first announced, one of Huawei's chiefs suggested they posed an existential threat.

The US still has time to back away from the measures before they are due to come into effect in September.

Even so, if the UK government is looking for a reason to revisit January's decision - perhaps to help secure a US trade deal or prevent a backbench revolt - the arcane world of chip design might provide the solution.

That decision was already hard-fought, with opposition in the cabinet to giving Huawei a role in 5G. But since then, the US has intensified its campaign, not just with the sanctions but also warnings about intelligence sharing and defence relationships.

All of that means a change may well be coming in the UK approach, but the exact nature of it remains unclear.

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HuaweiUKNational Cyber Security CentreNCSCGCHQ
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