A dispute between Huawei Technologies Co. and a small U.S.-based contractor has escalated to a federal court, with the contractor alleging Huawei stole its technology and pressured it to build a “back door” into a sensitive law-enforcement project in Pakistan, The Wall Street Journal reported.
According to The Wall Street Journal, the contractor is based on Buena Park, California, and is called Business Efficiency Solution LLC or BES. The company says in a lawsuit that it filed in a California district court that Huawei required it to set up a system in China that gives Huawei access to sensitive information about citizens and government officials from a safe-cities surveillance project in Pakistan’s second-largest city of Lahore.
The Wall Street Journal also reported that chief operating office of the Punjab Safe Cities Authority, Muhammad Kamran Khan, which oversees the Lahore project, said the authority has begun looking into BES’s allegations.
A copy of the lawsuit shows that the case has been filed in the United States District Court Central District of California. Here are some interesting allegations made by BES in the lawsuit:
…After Huawei’s successful bid for the Lahore Project, Huawei gained possession of BES’s most commercially viable trade secrets and other confidential information. Specifically, Huawei obtained BES’s complete software systems, including BES’s proprietary, trade secret “low-level designs” (“LLDs”). Meanwhile, Huawei began to contest its obligations to pay BES for the Lahore project and disputed its obligations to BES in connection with additional Safe City projects under the contract…
Some of the things that BES is asking the court for include “damages in the amount of BES’s actual losses and Huawei’s unjust enrichment; exemplary and punitive damages amounting to twice the sum of actual losses and unjust enrichment for willful and malicious misappropriation’ injunctive relief enjoining Huawei from continued misappropriation of BES’s trade secrets, including LLDs, or a reasonably royalty’ and specific performance requiring Huawei to return all of BES’s proprietary information, including the LLDs, and destroying copies made by, for, and on behalf of Huawei.”
It is unclear when (or if) BES’s legal action against Huawei will make it to a courtroom.
Huawei Investment and Holding Co., Ltd. announced that it has decided to sell all of its Honor business assets to Shenzhen Zhixin New Information Technology Co, Ltd. According to Huawei, this sale will help Honor’s channel sellers and suppliers make it through this difficult time.
Reuters reported that Honor is a budget brand smartphone unit of Huawei. It is being sold to a consortium of over 30 agents and dealers, according to a joint statement signed by 40 companies involved in the purchase.
Huawei will not hold any shares in the new Honor company after the sale, according to the statement, with the buyers setting up a new company, Shenzhen Zhixin New Information Technology, to make the purchase, the statement said.
Reuters also reported that sources with knowledge of the matter said that the U.S. government will have no reason to apply sanctions to Honor after it separates from Huawei.
Forbes reported that Honor made a name for itself by selling cheap smartphones. It also has a range of other low-budget equipment including laptops and routers that, Forbes reported, Honor “is currently banned from selling in the U.S.”
The Forbes article includes statements from Chief of Research at CCS Insight, Ben Wood. He pointed out that the deal has been confirmed, but has yet to be completed. He expects that Huawei will wait until after the U.S. administration transition in January happens before the consortium that will purchase Honor will attempt to re-engage with suppliers.
To me, it appears that Huawei hopes that by selling its Honor brand that incoming U.S. President Biden will choose to overturn current President Trump’s executive order that affected Huawei. The order blocked Chinese telecommunications companies from selling equipment made in the United States.
Qualcomm Inc. has received a license from the U.S. government to sell 4G mobile phone chips to Huawei Technologies Co Ltd., Reuters reported. This decision means that Qualcomm has complied with a rule that the U.S. Department of Commerce unveiled in May of 2020 that requires licenses for sales to Huawei Technologies of semiconductors made abroad with U.S. technology.
In August of 2020, Qualcomm asked the Trump administration to roll back its restrictions on the sale of advanced components to Huawei Technologies so that Qualcomm could sell chips for 5G phones to Huawei. At the time, The Wall Street Journal reported that Qualcomm was telling U.S. policy makers that their export ban won’t stop Huawei from obtaining necessary components. The company also said the export ban risked handing billions of dollars of Huawei sales to its overseas competitors.
The request by Qualcomm came after a patent-rights dispute with Huawei was resolved. The settlement gave Qualcomm a $1.8 billion lump-sum payment from Huawei to cover previously unpaid fees. It also included a multiyear deal to license Qualcomm’s patented technologies for Huawei use.
Obviously, that part of the settlement would not have worked out for Qualcomm unless it obtained a license from the U.S. Department of Commerce. A Qualcomm spokeswoman told Reuters, “We received a license for a number of products, which includes some 4G products.”
Engadget reported, in August of 2020, that after September 15, 2020, Huawei would no longer have access to the manufacturing it needs to continue making the Mate 40’s Kirin 9000 processor. The result was that Huawei was running out of smartphone chips.
The Wall Street Journal reported that Qualcomm Inc. is lobbying the Trump Administration to roll back restrictions on the sale of advanced components to Huawei Technologies. Qualcomm wants to sell chips for Huawei 5G phones.
Qualcomm is telling U.S. policy makers their export ban won’t stop Huawei from obtaining necessary components and just risks handing billions of dollars of Huawei sales to the firm’s overseas competitors, according to a presentation reviewed by The Wall Street Journal that the San Diego-based company has been circulating around Washington.
In May of 2020, the U.S. Department of Commerce unveiled a rule that expands U.S. authority to require licenses for sales to Huawei Technologies of semiconductors made abroad with U.S. technology. The rule greatly expanded the ability of the United States to halt exports to Huawei.
The result of the rule is that Huawei is running out of smartphone chips. The company no longer has the access to the manufacturing it needs to continue making the Mate 40s Krin 9000 processor. As such, supplies of the Mate 40 smartphone will be limited.
According to The Wall Street Journal, Qualcomm is arguing that granting it a license to sell chips to Huawei would generate billions of dollars in sales for Qualcomm and help it fund development of new technologies.
Qualcomm’s lobbying effort comes after a resolution of a patent-rights dispute with Huawei. Qualcomm will receive a $1.8 billion lump-sum payment from Huawei to cover previously unpaid licensing fees. The settlement includes a multiyear agreement to license Qualcomm’s patented technologies for Huawei use.
Based on this, it seems to me that Qualcomm will have a problem if it fails to convince the U.S. government to grant it the license it is seeking. I don’t see how the company could make use of the multiyear agreement with Huawei without having that license.
Huawei Technologies Inc. is running out of smartphone chips. This was announced by the company at the 2020 Summit of the China Information Technology Association during a speech by Richard Yu, the CEO of Huawei’s consumer business.
Engadget reported that after September 15, 2020, Huawei won’t have access to the manufacturing it needs to continue making the Mate 40’s Kirin 9000 processor. According to Engadget’s summary of Richard Yu’s speech, Chinese chip manufacturers such as SMIC do not currently have the capabilities to make up for the shortfall. As a result, supplies of the Mate 40 would be limited.
In May of 2020, The U.S. Department of Commerce unveiled a rule that expanded U.S. authority to require licenses for sales to Huawei Technologies of semiconductors made abroad with U.S. technology. This new rule enabled the United States to expand its ability to halt exports to Huawei Technologies.
At the time, Reuters reported that the rule also affected Taiwan Semiconductor Manufacturing Co Ltd., which supplied Huawei with chips. According to Engadget, SMIC is two chip generations behind Taiwan Semiconductor Manufacturing Co Ltd., and just started producing a 14nm Kirin chip for Huawei.
The Associated Press reported that Richard Yu said that production of Kirin chips designed by Huawei’s own engineers will stop on September 15, 2020, because the chips are made by contractors that need U.S. manufacturing technology. Huawei lacks the ability to make its own chips.
The date September 15 keeps coming up. It is the same date that the executive order President Trump signed that would ban U.S. transactions with TikTok and WeChat. It is also five days before the endpoint of Microsoft’s discussions with ByteDance, TikTok’s parent company, about Microsoft potentially acquiring TikTok. All of these things happening on the same date cannot possibly be a coincidence.
The UK government will bar telecom companies from purchasing new equipment made by China’s Huawei Technologies Co., The Wall Street Journal reported. The telecom companies have until 2027 to remove Huawei technology from their 5G networks.
Senior executives from Vodafone Group PLC and BT Group PLC told a parliamentary committee last week that a five-to-seven-year time frame would be needed to remove Huawei equipment to avoid disruption. But a group of Conservative lawmakers has been pressing the government to remove the equipment at a faster pace.
One thing to consider (as reported by The Wall Street Journal) is that the British telecoms have warned that the deadline to remove Huawei products from their networks could result in blackouts for customers. Personally, I think that’s going to negatively affect people, especially considering how many people are using the internet to connect with family members and to work from home during the coronavirus pandemic.
In May, the U.S. Department of Commerce unveiled a new rule that that expanded U.S. authority to require licenses for sales to Huawei Technologies of semiconductors made abroad with U.S. technology.
The UK government’s decision that requires telecoms to stop buying Huawei equipment comes after the rule made by the United States. According to The Wall Street Journal, the British the U.S. rule has raised questions about the quality of Huawei kit in the future.
The BBC reported that there are other political considerations that may have influenced the UK government to separate its telecom infrastructure from Huawei. According to the BBC, the UK wants to strike a trade deal with the United States. My assumption is that the U.S. might look more favorably upon countries that exclude Huawei than ones that do not.
The BBC also reported that there are growing tensions with China over China’s handling of the coronavirus outbreak and its treatment of Hong Kong (which was once a British colony).
The U.S. Department of Commerce unveiled a new rule that expands U.S. authority to require licenses for sales to Huawei Technologies of semiconductors made abroad with U.S. technology, according to Reuters, who was the first to report this. The new rule will enable the United States to vastly expand its ability to halt exports to Huawei Technologies.
Part of the wording of the Department of Commerce’s rule says:
The Bureau of Industry and Security (BIS) today announced plans to protect U.S. national security by restricting Huawei’s ability to use U.S. technology and software to design and manufacture its semiconductors abroad. This announcement cuts off Huawei’s efforts to undermine U.S. export controls. BIS is amending its longstanding foreign-produced direct product rule and the Entity List to narrowly and strategically target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology.
The Commerce Department’s rule, effective Friday but with a 120-day grace period, also hits Taiwan Semiconductor Manufacturing Co Ltd, the biggest contract chipmaker and key Huawei supplier, which announced plans to build a U.S.-based plant on Thursday.
According to Reuters, China’s response to this new rule is that Beijing is ready to put U.S. companies on an “unreliable entity list”. The measure includes launching investigations and imposing restrictions on U.S. companies such as Apple Inc., Cisco Systems Inc, Qualcomm Inc, and the suspension of purchases of Boeing Co airplanes.