The U.S. government has banned Chinese wireless infrastructure companies from working on networks here. The Australians have done the same for similar reasons.
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One of the major China companies tweeted:
We have been informed by the Govt that Huawei & ZTE have been banned from providing 5G technology to Australia. This is a extremely disappointing result for consumers. Huawei is a world leader in 5G. Has safely & securely delivered wireless technology in Aust for close to 15 yrs
— Huawei Australia (@HuaweiOZ) August 22, 2018
The worry is that the Chinese government will use the companies as a means to hack into sensitive networks.
The Trump administration cut off China Mobile Ltd. (NYSE: CHL) for related reasons. The National Telecommunications and Information Administration issued a statement: “After significant engagement with China Mobile, concerns about increased risks to U.S. law enforcement and national security interests were unable to be resolved.”
ZTE ran into greater problems, which nearly ruined it. It allegedly violated sanctions with North Korea and Iran. ZTE paid two penalties to get back into the United States. The first was for $892 million and the second for $1 billion. As the issue was resolved, President Trump tweeted:
President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!
— Donald J. Trump (@realDonaldTrump) May 13, 2018
The U.S. Department of Defense also has been blocked from using most ZTE and Huawei products.
The bans will cost the two companies hundreds of millions of dollars in the United States and Australia, at least. And it would not be surprising if major EU nations, Japan and South Korea institute bans of their own.
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