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U.S. seeks to force telecom gear makers to produce 5G equipment outside China

U.S. seeks to force telecom gear makers to produce 5G equipment outside China

Posted June. 25, 2019 07:32,   

Updated June. 25, 2019 07:32


The Trump administration is reportedly mulling whether to ask global telecom gear makers to manufacture U.S.-bound 5G equipment outside of China.

“The Trump administration is examining whether to require that next-generation 5G cellular equipment in the U.S. be designed and manufactured outside China, according to people familiar with the matter,” the Wall Street Journal (WSJ) said Sunday (local time). U.S. President Donald Trump issued an executive order last month to restrict networking gear and services made in foreign countries and to review the U.S. telecommunications supply chain for 150 days to devise a plan. “As part of that review, U.S. officials are asking telecom-equipment manufacturers whether they can make and develop U.S.-bound hardware, which includes cellular-tower electronics as well as routers and switches, and software outside of China,” the WSJ reported.

Washington has paid keen attention to the potential of 5G mobile communications technologies, which would serve as the foundation of the fourth industrial revolution including autonomous driving, remote surgeries and operations by robots, as well as national security concerns it entails. Increased connectivity of objects based on ultrafast 5G networks would apparently escalate cybersecurity risks. “U.S. officials have long worried that Beijing could order Chinese engineers to insert security holes into technology made in China. They worry those security holes could be exploited for spying, or to remotely control or disable devices,” the WSJ said.

The Trump administration’s such moves to regulate 5G hardware shipped to the United States are still in early stages, and it may take months or years for the administration to apply any rules. Yet, the fact that there are ongoing conversations can effectively pressure global manufacturers to exit China. In fact, Finland’s Nokia and Sweden’s Ericsson, which sell equipment to U.S. wireless carriers, have reportedly moved, or made preparations to move, their production facilities in China to other regions to avoid the Trump administration’s tariff hikes. The WSJ cited Citi analysts as saying that “China represented 45% of Ericsson’s manufacturing-facility area and 10% of Nokia’s in 2018.”

“Last month’s White House order for the telecom supply-chain review said the U.S. may create a list of countries considered ‘foreign adversaries.’ China is expected to be listed as one,” the WSJ added.

Yong Park parky@donga.com