The Huawei Ban Explained

On Twitter I recently asked: What is the first thing that comes to your mind when you think about Huawei? I got a lot of different responses. Some people said they’d never heard of it before. Some set, it’s a great phone, some said espionage, some said it’s a terrible phone. A few people thought it was a vacation spot, like they thought it was Hawaii. The real question, however, is why did President Donald Trump sign an executive order banning Huawei as a threat to national security?

What’s the big deal about them? Why is the director of NSA, FBI, CIA saying to stay away from it? Why are so many people around the world from the intelligence community worried about Huawei? What is it? Is there something you and I don’t know about? Is that maybe a cyber war? Maybe somebody spying on you and I? What is it?

You may be asking yourself: Pat, why do I need to know about Huawei are a few different reasons:

The market – The outcome of this ban could in worst case create a market correction of 10% to 20%
Cybersecurity privacy – A big part of the Huawei controversy is about privacy and security, a topic is ongoing in todays society.
Conversation starter – conversation starter in the world of business.

9 reasons why U.S companies were banned from doing business with Huawei:

1. Espionage

Why espionage? China is accused of using Huawei to spy on US and other countries?

2. Competition

Is this us as way of protecting Apple form foreign competition?

3. Iran – Violating U.S Sanctions

Huawei did business with Iran through their subsidiary which violates the US sanctions in place

4. 5G – The Next Generation

5G is the next generation of telecommunications, is the US afraid China is going to beat them to it?

5. First to

The power of being first to gives you huge advantages

6. Power / Worldwide Domination

Is the US scared that China will take over as the dominant power?

7. Cyberwar Insurance policy

Is this a way for the US to stay proactive in the case of a potential cyberwar?

8. Stealing trade secrets

Is the US punishing Huawei for the multiple allegations for stealing trade secrets from US companies?

9. Tariffs

Is Huawei being caught in the middle of the ongoing US vs China Tradewar?

Given that the US banned Huawei from working with American companies, how involved is the Huawei Global Market as opposed to US market? Lets look at the Chinese smartphone market:

Let’s look at how the Chinese smartphone-maker has become such a dominant player on the global market:

What does a company do differently from all the other competitors in order to experience such a crazy growth? Look at Huawei’s Research and development budget:

It is important to remember that the $15.3 billion in R&D is China labor, not engineers from Silicon Valley.

So why is everyone still so worried?

In February 2019 President Trump tweeted:

“I want 5G, and even 6G, technology in the United Sates as soon as possible. It is far more powerful, faster, and smarter than the current standard. American companies must step up their efforts or get left behind. There is no reason that we should be lagging behind on something that is so obviously the future. I want the United States to win through competition, not by blocking out current more advanced technologies. We must always be the leader in everything we do, especially when it comes to the very exciting world of technology!”

So why did Trump go ahead and ban Huawei? Isn’t that contradicting?

Here is how much more powerful 5G is compared to previous generations:

Here is the added economic influence that comes with 5G:

5G is game changing, below is the projected timeline of completion for the different countries around the world:

If China is the first company to get ahold of 5G it could possibly pass up the US and become the dominant empire worldwide.

Having looked at global market as well as 5G, let’s look at the timeline of how Huawei and see how everything got to the point where the US banned Huawei.

At this point you’ve been given so much different information, you’re saying, holy Moly, I had no idea this was taking place with Huawei.

Here’s what I think the President, the administration, Tim Cook and these companies need to be focused on today: 5G!

Why? Because 5G is the real issue. Let me explain why if in 2020 China gets 5G and they give it to 57 different countries and not the US (five years later) it will not favor the US.

All of a sudden other countries in Europe, South America will start contacting China to do business with Huawei because they’ll have 5G before everyone else. They will broker deals, like the Prime Minister David Cameron did. Cameron brokered a deal of 1.2 billion pounds with Huawei; what if other countries start doing the same? What if suddenly everybody has 5G, everybody has incredible technology and US doesn’t for another five years?

So now watch what happens when you’re raising money and you deal with investors. Here’s what takes place. You the entrepreneur, the owner, the shareholder, the investor comes in. You have 20 different markers to negotiate with. So you go through the whole back and forth and you, the investor or you, the entrepreneur have to decide what you’re willing to give up. US is not in a power position with everything. I know it may seem like it, but they’re not, very simple. This, this is the scariest part with the 5G. So president Trump, his administration, with all the advisors, Tim Cook, they all have to sit down and figure out what they’re willing to give up and what they’re not willing to give up.

Because if they just go and say, I want all of it, it may crack 20-30% because China’s going to ask for something because they have something that US doesn’t have, and that’s 5G in a year. That’s massive. They have to sit in a room and lay all these things out and US has got to say to China, here’s what we’re doing. I’ll cut the tariffs, but you’ve got to give 100% of the 5G license to US in 2020 when you get it.

The US has to figure out a way to get this technology. It’s going to be very interesting. There’s a lot of leverage and I hope all the brains can come together and figure this part out because me, I’m just an entrepreneur who’s giving this information to you. So having said that, if you watch this video, you want to go a little bit more into it and find out more about the US China trade, where I made a video titled Us China Trade War Explained.

Who do you think will win this battle?

Recommended video to watch next: US China Trade War Explained – Who Needs Who?

Sources for Huawei:

Global sales for Huawei phones 2018:

https://www.idc.com/getdoc.jsp?containerId=prUS44826119

China phone Sales:

https://www.idc.com/getdoc.jsp?containerId=prAP44865419

R&D research

http://www.chinadaily.com.cn/a/201905/07/WS5cd0b7c0a3104842260ba1c1_11.html

Huawei timeline

https://www.computerworlduk.com/security/huawei-controversies-timeline-3692840/

Huawei violating US sanctions