As more countries follow US president Donald Trump's lead and turn against Huawei, the world's biggest telecommunications equipment-maker could find itself cut out of 5G networks all over the world.

Chinese companies like Huawei and ZTE have found themselves in the crosshairs of a US-China trade war as Trump tries to get other countries to follow his lead in banning the use of their technology products and services due to "national security threats" linked to their close ties to the Chinese government and Chinese intelligence.

Huawei has denied installing any backdoors in its networking equipment for alleged government spying.

Japan has excluded Huawei from public procurement, and Australia and New Zealand have effectively blocked Huawei from involvement in the rollout of their 5G network infrastructure. The UK, Canada, Poland and Germany are also assessing whether to exclude Huawei from forthcoming infrastructure rollouts.

"The real objective behind the US going after Huawei and ZTE may well be economic, to hamstring or cripple potential technology rivals, and to prevent them from playing a lead role in the development and implementation of 5G," says independent analyst Charley Lewis.

Huawei is the world's biggest producer of telecoms equipment and ranks second in global smartphone sales, behind South Korea's Samsung and ahead of the US's Apple.

"There is definitely a subtext to the trade war and the legal case that the USA is trying to halt the Huawei charge on world markets," says World Wide Worx MD Arthur Goldstuck.

"It has already overtaken Apple to become the world number two in smartphone sales. It may well overtake Samsung too. This in itself is galling to those Americans who associated Apple's leadership with American strength. Now Huawei is also poised to lead the world in 5G technology, making it a double-whammy for Chinese technology over American technology.

"Given the behaviour of the Trump administration in general, it is not unlikely its legal actions are a camouflage for political and trade action," adds Goldstuck.

However, it's not only nation states that are worried about Huawei. Mobile operator Vodafone last week said it was "pausing" the deployment of Huawei equipment in its core networks in Europe; and BT and Orange have also taken steps to limit the future use of Huawei equipment.

Despite the rising anti-Huawei sentiment, the company says it has already secured 30 commercial contracts for 5G and shipped more than 25 000 base stations to markets around the world.

"A large number of network customers globally have indicated they want Huawei. We are currently the market leader with the best equipment for faster and more cost-effective upgrades to 5G and will remain so for at least the next 12 to 18 months. Security concerns based on the innovation of technology are legitimate and affects all telecommunications vendors," Huawei SA's spokesperson Vanashree Govender told ITWeb.

"We will continue to work in countries where we are welcomed to build high-quality networks, prove our worth and earn trust."

But Goldstuck believes "Huawei should be worried, and the Chinese government can be expected to step in strongly on its side".

"It is already being frozen out of one of the world's biggest markets, and others may follow."

US charges

Yesterday, Huawei's trouble got even worse, when news broke that the US had filed criminal charges in New York against Huawei and CFO Meng Wanzhou, as well as two Huawei affiliates: Huawei Device USA and Iranian subsidiary, Skycom.

The 13-count indictment included charges for violating US sanctions against Iran, bank fraud, wire fraud and conspiracy to commit money laundering. Separate charges were also filed in Washington State accusing Huawei of stealing trade secrets from T-Mobile.

Huawei responded, saying it was "disappointed to learn of the charges".

"The company denies that it or its subsidiary or affiliate have committed any of the asserted violations of US law set forth in each of the indictments, is not aware of any wrongdoing by Ms Meng, and believes the US courts will ultimately reach the same conclusion," Huawei said.

Meng, who is the daughter of Huawei founder and CEO Ren Zhengfei, was arrested in December 2018 in Canada and the US government is seeking her extradition to the US.

"Huawei is currently under sustained pursuit, not solely by the US but with the US certainly leading the pack of hounds, on a number of loosely-related fronts. Together, these stand to have a serious impact both on the company's immediate bottom line and on its ability to stay abreast of the innovation curve in the medium term. Indeed, it is a 'perfect storm' with the potential to cripple the company, or reduce it to a bit player in a limited range of developing county markets, with Africa being a particular focus," says Lewis.

Knock-on effect

According to Bloomberg, German telecoms company, Deutsche Telekom, has warned Europe would fall behind the US and China in the 5G race if governments ban the Chinese equipment supplier over security fears.

Officials at Deutsche Telekom reportedly warned that removing Huawei from the list of suppliers of fifth-generation networks would delay rollout of the technology by at least two years, according to an internal assessment.

Goldstuck agrees, saying: "Huawei is already a world leader in 5G technology. If it is kept out of Europe, then that continent will probably have a less successful 5G rollout then elsewhere."

"The problem with going after Huawei, and banning the sale and purchase of Huawei technology, is that it has a number of knock-on effects for companies heavily exposed to Huawei. Much of this is potentially anti-competitive and arbitrary," Lewis adds.

"Huawei is at the forefront of the global stampede to 5G, with an avalanche of patents and a central role in the development of 5G standards. Banning the company in a number of key ITU countries will surely throw the 5G project into some turmoil."

Lewis also points out that a Huawei ban in effect sabotages a slew of third-party companies in various countries and will likely cost a lot of money.

"Those companies with the greatest exposure to Huawei components in their networks are likely to be most at risk, either directly or indirectly, in either the short term or the medium term. For example, Australia's new mobile entrant, TPG Telecom, looks to be headed for bankruptcy because its 5G-ready network depends on Huawei equipment costing billions... and the very US companies alleged to be the victims of Huawei's industrial espionage (T-Mobile and others) will lose millions in lucrative sales of the chips and other US components on which Huawei depends."

He says in SA, Telkom looks to be the most affected of the mobiles, although others operators MTN, Vodacom and Cell C also make extensive use of Huawei equipment (along with Nokia, Ericsson and ZTE).

"Of course, they will still be able to buy and install Huawei equipment, despite any country bans. But if the US succeeds in its apparent quest to cripple Huawei's technological edge, that equipment may soon no longer be state-of-the-art technology, raising a series of maintenance and upgrade path and compatibility issues."

SA predicament

Most experts agree it's unlikely SA will follow the West's lead and turn its back on Chinese tech, due to close ties in BRICS and the fact that China is a key trading partner.

"As a government, South Africa won't follow suit. It has strong relations with China, and Huawei is a valued corporate citizen of this country. There is no reason for South Africa to take action in what is really a trade war between the USA and China," Goldstuck explains.

"Huawei will continue to collaborate with operators, governments and regulators in South Africa and the continent to ensure end-to-end cyber security solutions tailored for our customers. Huawei has a 20-year track record of doing business in Africa. We've had no security breaches in Africa or in the rest of the world to date. Africa is a key market for Huawei," Govender adds.

When asked about the impact on the SA business so far, Govender says "globally and locally the trade conflict between China and the US has not had a major impact on our business".