Huawei suffers under US pressure

Huawei is one of China’s biggest international success stories, but has come under heavy fire from the US over accusations of espionage. (AP)
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Updated 21 August 2020

Huawei suffers under US pressure

  • Telecommunications giant, now the world’s biggest smartphone company, is the subject of suspicion in Washington
  • 1987 Huawei was founded in 1987 by former military engineer Ren Zhengfei

BEIJING: For nearly a decade, Huawei kept worldwide sales growing as Washington told US phone companies not to buy its network equipment and lobbied allies to reject China’s first global tech brand as a security threat.

Focusing on Europe, Asia, Africa and China’s booming market, Huawei became the biggest maker of switching gear and a major smartphone brand. As the White House cut off access to American components and Google’s popular music and other smartphone services, Huawei unveiled its own processor chips and app development. Last year’s sales rose 19 percent to $123 billion.

Now, Huawei is suffering as Washington intensifies a campaign to slam the door on access to foreign markets and components in its escalating feud with Beijing.

European and other phone carriers that bought Huawei gear are removing it from their networks. Huawei got a flicker of good news when it passed rivals Samsung and Apple as the No. 1 smartphone brand in June, but demand abroad is plunging.

“Huawei is losing market share quite dramatically outside China,” said industry analyst Paul Budde. “Their international position is most likely going to get worse rather than better.”

In the latest blow, the US Commerce Department this week confirmed rules announced in May that will bar non-American companies from using US technology to make processor chips and other components for Huawei without a government license.

The president of Huawei’s consumer business, Richard Yu, says it is running out of chips for smartphones. Yu said as of Sept. 15, contractors will be forced to stop making Kirin chips designed by Huawei’s engineers.

“This is a very big loss for us,” Yu said Aug. 8 at an industry conference, China Info 100.

Huawei heads a growing list of Chinese tech names the Trump administration is targeting as security risks in an initiative called Clean Networks. It wants countries to remove them as suppliers to telecom systems, undersea cables and app stores.

The White House has banned unspecified transactions with Chinese-owned platforms TikTok and WeChat, and is pressing TikTok’s owner to sell it. In June, the Pentagon added Huawei and surveillance firm HikVision to a list of companies it said were owned or controlled by the Communist Party’s (CCP) military wing. Last year, the Chinese owner of Grindr was ordered to sell the dating app.

Huawei is hardly finished. It says sales rose 13 percent to 454 billion yuan ($65 billion) in the first half of 2020. But after spending a decade and billions of dollars to become a leader in next-generation tech, the company faces the threat of being shut out of many major markets.

That is a setback for the CCP’s ambition to make China a global tech leader.

Western companies and consumers may also lose access to Huawei’s resources that can cost 30 percent less than that of rivals Ericsson and Nokia.

US, European and Japanese suppliers of processor chips and other technology stand to lose billions in sales to Huawei. “It doesn’t benefit any country to exclude Huawei,” said IDC’s Nikhil Batra.

Huawei, founded in 1987 by former military engineer Ren Zhengfei, denies it might help Beijing spy. Chinese officials complain Washington is whipping up phony security fears, without proof, to block a competitor to US tech companies.

The Trump administration is ramping up pressure on allies, including by threatening to withhold intelligence sharing if they allow Huawei into next-generation, or 5G, networks.

Huawei’s US market evaporated after the company and Chinese rival ZTE Corp. were declared security threats in 2012 by a congressional panel. Small, rural carriers still use Huawei’s lower-cost equipment, but Washington is prodding them to stop.

5G will expand networks supporting self-driving cars, factory robots, remote surgery and other futuristic applications. That makes 5G more intrusive and raises the cost of potential security breaches.

US officials say buying a 5G network from China is too risky because vendors need round-the-clock access for repairs and upgrades. Clean Networks cites Huawei as part of the CCP’s “surveillance state.”

“We call on all freedom-loving nations and companies to join the Clean Network,” said Secretary of State Mike Pompeo.

Last year, Huawei raced to remove American components from products after President Donald Trump blocked access to US processor chips and other tech, including Google services. 

The CCP has fought back by threatening unspecified consequences against countries that block Huawei’s market access.

After the latest sanctions, the foreign ministry called on Washington to “stop suppressing” Chinese companies.

“The more hysterical the US suppression of Huawei and other Chinese companies, the more it proves the success of these companies,” said a ministry spokesman, Zhao Lijian.

In Europe, which supplied one-quarter of Huawei’s 2019 sales, Germany and France are deciding what role it can play in 5G. The UK agreed in January to a limited presence but changed course in July and banned Huawei from its mobile networks.

British mobile carriers BT and Vodaphone are also removing Huawei from European networks.

Vodafone has warned that rolling out 5G in Europe could be delayed by up to five years if other governments imposes similar limits.

“It would be hugely disruptive,” CEO Nick Read said in February.

Australia has banned Huawei from 5G networks, and Japan and Taiwan are limiting use of its technology. US officials, meanwhile, are promoting “trusted suppliers” like Ericsson and Nokia, and say they may help Brazil and others pay for Western equipment to avoid using Huawei.


Indonesia turns focus to energy security and renewables amid pandemic

Updated 24 November 2020

Indonesia turns focus to energy security and renewables amid pandemic

  • Govt. aims to use of opportunity presented by COVID-19 outbreak to make transition

JAKARTA: The fallout from the coronavirus pandemic has presented Indonesia with the opportunity to work toward energy security and switch from conventional to renewable sources, officials have said.

“Indonesia has made various breakthroughs such as making use of biodiesel B30,” Foreign Minister Retno Marsudi said during an online press conference on Sunday, quoting President Joko Widodo’s address during the G20 Summit.

“(We) will be conducting tests on green diesel D100 from palm oil – which will absorb 1 million tons of palm oil produced by farmers – and also install rooftop solar power plants in hundreds of thousands of households,” he added.

Widodo also made a reference to data from the World Economic Forum on the massive potential of the green economy, which could generate up to $10.1 trillion and create 395 million new jobs by 2030.

Earlier this month on Nov. 4, energy and mineral resources minister Arifin Tasrif said that the current difficulties posed by the pandemic had spurred Indonesia to accelerate the energy transition, by developing renewable energy, ensure efficiency and work toward maintaining energy security for lasting energy independence.

Energy security and its steady supply were some of the top concerns voiced by Tasrif during the G20 energy ministers’ meeting in September.

“COVID-19 has created an economic crisis and shrunk energy demands. All G20 members must work together to ensure that the energy market is stabilized and maintain supply affordability. These are a top priority for Indonesia,” Tasrif said at the meeting.

He also lauded Saudi Arabia, the summit host, for pushing ahead with the 4Rs issue – Reduce, Reuse, Recycle, Remove – in the circular carbon economy (CCE) concept, which was endorsed by the energy ministers after their meetings.

Tasrif said the issue was an “important part of reintroducing the role of biofuel and hydrogen in the CCE platform,” and in line with Indonesia’s adoption of the mandatory use of biodiesel – containing 30 percent palm oil and known as B30 – from January this year, specifically in the transport, power plant, industrial and commercial sectors.

Indonesia, the world’s largest palm oil producer, has set a target to use 23 percent of renewable energy by 2025 and 50 percent by 2050, as part of its national energy mix plan.

The government has listed provisions for renewable energy and its conservation among its seven priority programs for next year and allocated 16.7 billion rupiahs ($1.2 million) for environmental preservation efforts in the 2021 budget.

“Our state budget is very much pro-green ... The government is already on the right track with the implementation of energy transition policy,” Arif Budimanta, a special presidential staff on economic affairs, said during an online discussion recently.

He added that President Joko Widodo had been very “hands-on” with the implementation of the energy transition policy and was directly supervising the progress of the policy.

Government officials claimed that the adoption of B30’s mandatory use – the first in the world – has been successful.

However, its target this year had reduced from the initial 9.5 million kilolitres to 8.3 million kilolitres, with 6 million kilolitres realized so far.

Mandatory use is expected to reduce carbon dioxide emissions by 16.9 million tons.

“The switch to a biodiesel program, which has been in place since 2015, has been able to replace almost 25 million liters of imported fossil fuel by June this year, and we have been able to save foreign exchange spending by roughly equivalent of 127 trillion rupiahs,” Eddy Abdurrachman, head of the Palm Oil Plantation Fund Management Agency said during a recent webinar.

Static tests on diesel engines for 1,000 hours of use of the biodiesel blend are underway at the Energy and Mineral Resources Ministry’s research and development lab.

The head of the research and development agency, Dadan Kusdiana, said on Aug. 26 that scientists had managed to conduct studies on the lab’s engine test bench after the COVID-19 outbreak restricted them from testing on the roads.

“We expect to wrap up the tests by the end of the year,” Kusdiana said.