5G Technology Arms Race Between US and China is the Real Deal – Security Expert

© REUTERS / Ng Han GuanPedestrians walk past a Huawei retail shop in Beijing Thursday, Dec. 6, 2018
Pedestrians walk past a Huawei retail shop in Beijing Thursday, Dec. 6, 2018 - Sputnik International
US President Donald Trump is considering banning American companies from using telecommunication equipment made by China's Huawei manufacturer. Sputnik discussed the matter and related themes with an expert.

According to Reuters reports, Trump's order would direct the Commerce Department to block American companies from buying equipment from foreign telecommunication makers that pose national security risks. The news comes as British Defence Secretary Gavin Williamson expressed concerns over the involvement of Huawei in the UK's 5G network.

Radio Sputnik discussed this with Daniel Ives, Managing Director of Equity Research at Wedbush Securities in New York.

Sputnik: If the US president does introduce this order banning US companies from using telecommunications made by Huawei, what does that mean for domestic manufacturers?

Daniel Ives: Look, I mean this would be a major shutter cross to [bar] in his battle versus China. Domestically the issue is on ZTE and Huawei. They are significantly cheaper, especially for rural carriers in the Mid-West. So this would really be you know a major sort of change and something that I think would kind of be a big signal to both domestic and international carriers.

READ MORE: Analyst Explains Where Tensions Between US and China to End

Sputnik: So are you saying, Daniel, that this would hurt the consumer market within America then?

Daniel Ives: Well, specifically for rural carriers that have current Huawei or ZTE switches, I mean, it would potentially be incremental expenses upwards of a billion dollars for some of these carriers to switch out. So if suddenly this happened it would be a major disruption to the carriers and potentially to consumers. And I think that's why it is something where this looks good on paper and it is important in the eyes of the "stay away" from a national security perspective but how it would be handled and the incremental cost carriers, I think it is a big question in terms of how that would be handled and if the government would subsidise that.

Sputnik: Now reports have cited the interest of national security is the main reason behind this order. In your view is that the case? Or is it basically another channel of "America First" that Trump is following in terms of his strategy to return jobs and wealth and American products focus back to the US?

Logo for Huawei at a launch event for the Huawei MateBook in Beijing - Sputnik International
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Daniel Ives: 5G is a technology arms race between the US and China, and I think this is the real deal. Because this is something where you look at the China "2025 plan" and you look where 5G is going, now there definitely needs to be a line in the sand here in terms of 5G but remember we saw there were the Broadcom, Qualcomm [position] that ultimately got block for national security. So this is really about 5G and I think how the Trump administration handles this. They need to handle this whole situation with "kid gloves" especially as it leads to how it could potentially impact world rural carriers and it ultimately plays into the China-US negotiations. And this continues to be, in our opinion, the main risk for a lot of US tech stocks in terms of any type of reciprocal type of a situation where China maybe comes back at Apple. So I think that is where you worry about here: it is not even just this, it is the ripple effect and how it could impact companies even like Apple. So this is not just the rural carriers, you're talking about  very intertwined countries. So I think it is one where we all got to be careful on how this is handled because just as we saw a ZTE number of months ago and ultimately we had to bail them out. So why these come back to haunt US AdWords technology companies, especially potential reciprocal type nature going against companies like Apple, where China remains the key to their supply and demand.

Sputnik: And just the final word: Do you think that this particular situation is going to come back to haunt Donald Trump?

Daniel Ives: If China comes to the table and this is just another tactic that helps them get there and ultimately you start to get a negotiation that put the US in more of a position of restraint. It is viewed as a victory, right. I think that is why the coming months are going to be key to how this all handled. And all to remember is that just let the winner being the US or the winner being China. We are talking about millions of computers as well as companies that are involved in this. So I think it is very important to understand the consequences, both on the Chinese side as well as US side, given that the companies and the countries are so intertwined from the technology perspective. But 5G, that is a divisive line in the sand and that is why you are seeing the pressure put on in the kitchen, both in China as well as in the US.

The views and opinions expressed by Ivan Danilov are those of the contributor and do not necessarily reflect Sputnik's position.

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