Why Huawei Matters
December 06 2018 - 2:22PM
Dow Jones News
By Dan Strumpf
Huawei Technologies Co. has been the target of a yearslong,
multipronged effort by Washington to limit the telecom-equipment
giant's footprint, both in the U.S. and around the world. Here's
what you need to know:
What Does Huawei Make?
It is the world's largest manufacturer of telecommunications
equipment. That includes base stations and cellular towers that
help connect devices across networks. Huawei is also the
second-largest maker of mobile phones globally, just behind Samsung
Electronics Co. It recently pulled ahead of Apple Inc., despite
selling almost no phones in the U.S.
How Big a Company Is It?
Huawei, founded by Ren Zhengfei, is widely seen as China's
biggest global success story. The company employs about 180,000
people, more than Intel Corp., and has built telecom networks
around the world, including in Europe, Africa and South
America.
Its revenue of $92.5 billion last year is more than three times
the revenue generated by Chinese e-commerce giant Alibaba Group
Holding Ltd. It pours about one-third of its budget into research
and development, about $13 billion last year, making it one of the
world's top spenders on R&D.
So, What's the Controversy?
Huawei has been dogged for years by concerns from the U.S. that
it could be subject to Chinese government influence, making its
equipment vulnerable to espionage by Chinese authorities. These
concerns were officially raised in a 2012 report by the U.S. House
Intelligence Committee, which said the company posed a national
security threat.
More recently, the U.S. has grown concerned that Huawei's
strides in developing 5G -- technology headed for the
next-generation mobile networks -- could force U.S. companies to
one day buy equipment from Huawei. Huawei's major competitors in
telecommunications gear are Sweden's Ericsson AB and Finland's
Nokia Corp. No American company is any longer a major contender in
telecommunications equipment.
What Does Huawei Say?
Huawei says it is employee-owned and doesn't do Beijing's
bidding. It says its gear is as safe as any of its competitors'
because the industry shares common supply chains. In order to sell
its gear in the U.K., it has allowed British authorities virtually
unlimited access to inspect its equipment at a lab that is overseen
by a board that includes British government officials.
Who Is Mr. Ren, the Founder?
Mr. Ren, 74 years old, left the Chinese army shortly before
founding the company in 1983, the company has said. A shareholding
arrangement gives him a 1.4% stake in the company.
Who Is Meng Wanzhou?
Ms. Meng is Mr. Ren's daughter and the chief financial officer
of Huawei, making her one of its highest-ranking executives.
Earlier this year she was elevated to deputy chairwoman, a position
that places her just under her dad in the corporate hierarchy and
on equal footing with three other executives who take turns as
rotating chairs of the company. She has been arrested in Canada at
the request of U.S. authorities for alleged violations of Iran
sanctions. It wasn't possible to immediately reach an attorney or
representative of Ms. Meng.
Write to Dan Strumpf at daniel.strumpf@wsj.com
(END) Dow Jones Newswires
December 06, 2018 14:07 ET (19:07 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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