US Feds Give Huawei and ZTE the Boot

News
By Lucian Armasu
published

Huawei P20 Pro

President Donald Trump today signed the new National Defense Authorization Act (NDAA) for 2019, which includes a ban against government agencies using devices or electronic components sold primarily by Chinese firms Huawei and ZTE.

NDAA 2019 Bans Government Use Of Huawei, ZTE

The 2019 NDAA bill bans U.S. federal agencies from using anything from Huawei or ZTE that is a “substantial or essential component of any system,” as well as any technology that is used to route or view user data.

The ban doesn’t cover just Huawei and ZTE, but other Chinese telecommunications hardware makers, such as Hytera Communications, Hangzhou Hikvision Digital Technology Company and Dahua Technology Company. Because the ban on Huawei and ZTE components could prove to be a major disruption to some agencies that relied on the cheaper Chinese technology, the bill also allocates funds for the agencies and companies that need bigger budgets in order to replace all the necessary components.

The Senate Wanted More

Recently, ZTE suffered a crisis in the U.S. when the Department of Commerce issued a ban against U.S. companies purchasing devices or components from the state-owned Chinese company. The Department of Commerce issued the ban primarily because ZTE was ignoring the sanctions against Iran and other countries.

This ban, which many thought could have killed the company, was quickly reverted once President Trump intervened. However, ZTE still had to pay $1 billion in fines for its past transgressions, as well as put $400 million into an escrow account in case it repeats the same violations in the near future.

However, both the U.S. House and Senate didn’t think the fine was enough, so they re-included their own versions of the ban in amendments to the 2019 NDAA. The Senate wanted a complete ban on all Huawei and ZTE devices sold into the country, while the House wanted to ban only federal agencies from using the Chinese devices. The Senate dropped its version of the bill and went with the House version instead.

U.S. federal agencies will have to replace all devices and components from Huawei, ZTE and the other Chinese companies mentioned in the bill over the next two years until the ban fully goes into effect.

Lucian Armasu
Lucian Armasu
Lucian Armasu is a Contributing Writer for Tom's Hardware US. He covers software news and the issues surrounding privacy and security.
12 Comments Comment from the forums
  • That's good for US companies like Qualcomm, but is there enough supply to meet the demand? Can the US companies manufacture everything in-house?
    Reply
  • Karadjgne
    Why in-house? There's always Mexico.
    Reply
  • techy1966
    The only problem I have with the US thinking they are the all mighty of everything is that it affects people in other countries as well such as Canada. I do not want to have to pay more for my stuff just because the USA is having a hissing fit with China. I was thinking Mr Trump would be good for the USA because he had some fairly ok ideas. The problem I see now is he thinks running a country is like running a large corporate company. This is not the case and if he makes bad calls it not only affects millions of people in his own country but it also affects millions of people in countries like Canada he is almost as bad as our own prime minister which is actually a real douche bag and at least 80% of us can not wait to oust his butt in 2019.
    Reply
  • JamesSneed
    21230792 said:
    The only problem I have with the US thinking they are the all mighty of everything is that it affects people in other countries as well such as Canada. I do not want to have to pay more for my stuff just because the USA is having a hissing fit with China. I was thinking Mr Trump would be good for the USA because he had some fairly ok ideas. The problem I see now is he thinks running a country is like running a large corporate company. This is not the case and if he makes bad calls it not only affects millions of people in his own country but it also affects millions of people in countries like Canada he is almost as bad as our own prime minister which is actually a real douche bag and at least 80% of us can not wait to oust his butt in 2019.

    You lost me at "I was thinking Mr Trump would be good for the USA because he had some fairly ok ideas." Trust me your prime minister is a lovely guy in comparison.
    Reply
  • dudmont
    21230792 said:
    The only problem I have with the US thinking they are the all mighty of everything is that it affects people in other countries as well such as Canada. I do not want to have to pay more for my stuff just because the USA is having a hissing fit with China. I was thinking Mr Trump would be good for the USA because he had some fairly ok ideas. The problem I see now is he thinks running a country is like running a large corporate company. This is not the case and if he makes bad calls it not only affects millions of people in his own country but it also affects millions of people in countries like Canada he is almost as bad as our own prime minister which is actually a real douche bag and at least 80% of us can not wait to oust his butt in 2019.

    The market will sort this out just fine. I very much doubt what's south of your border will have anything more than a marginal impact on the prices you pay for your next phone. Further, I would bet money that sometime in the near future, auction sites will have some Chinese Telecom equipment up for auction.
    While I think the my government is too big, has it's hands in too many pies, uses resources very poorly, and generally doesn't do a very good job at anything, I very much think this is a wise move. What did Lenin say about capitalism? "They'd sell us the rope we use to hang them"? I've come to think that doing business with China is very similar to Lenin's thoughts. How we deal with China needs to be rethought, and fast, and that's not just for the US. China's ambition's extend globally.

    Reply
  • mlee 2500
    21230732 said:
    That's good for US companies like Qualcomm, but is there enough supply to meet the demand? Can the US companies manufacture everything in-house?

    I wouldn't be so sure about that...allot of those companies use Qualcomm's Snapdragon and modem chips (Qualcomm doesn't make actual devices themself), and this action may drive the federal agencies to platforms which use Samsung Xynos or Apples own in-house processors and possibly Intel modems. Not to mention drive those Chinese device makers to use mediatek or other chinese silicon in their own domestic market (but, frankly, they were probably headed that direction anyway).

    UPDATE: Yep, just as I suspected.... https://www.reuters.com/article/us-china-zte-qualcomm-analysis/u-s-strike-on-chinas-zte-another-blow-for-qualcomm-idUSKBN1HO0XT That's a dated link, but it shows how much of Qualcomm's business is dependent on Hauwei and others mentioned.
    Reply
  • dhayric
    FBI director Wray publicly stated that the greatest threat to America is not Russia but rather Chinese espionage. This is a good move. China has never been our friend and slid their way into the WTO by pretending to be an innocent third world country while masking their nefarious intentions.
    Reply
  • coolitic
    Article title is misleading
    Reply
  • olaf
    Yet it's funny the only country caught with his hand in the proverbial cookie jar is the US. Guess they'd know how to spy on others... Mean while ill just enjoy my cheap FTTH broadband in Europe, with a Huawei ONT.
    Reply
  • gggplaya
    21231114 said:
    21230732 said:
    That's good for US companies like Qualcomm, but is there enough supply to meet the demand? Can the US companies manufacture everything in-house?

    I wouldn't be so sure about that...allot of those companies use Qualcomm's Snapdragon and modem chips (Qualcomm doesn't make actual devices themself), and this action may drive the federal agencies to platforms which use Samsung Xynos or Apples own in-house processors and possibly Intel modems. Not to mention drive those Chinese device makers to use mediatek or other chinese silicon in their own domestic market (but, frankly, they were probably headed that direction anyway).

    UPDATE: Yep, just as I suspected.... https://www.reuters.com/article/us-china-zte-qualcomm-analysis/u-s-strike-on-chinas-zte-another-blow-for-qualcomm-idUSKBN1HO0XT That's a dated link, but it shows how much of Qualcomm's business is dependent on Hauwei and others mentioned.


    No No No, that link is a hypothetical, a wrong one at that since ZTE mostly sells cheap sub $100 and sub $200 phones. So for them to quote an average chipset price from qualcomm of $25 is a bit off since the snapdragon 400 series fetches more like $8-$15. But I digress because after this hypothetical article, we did resume allowing sales of ZTE phones in the U.S. with caveats. With the current bill in this article, the ban is only limited to the U.S. government, which I doubt uses very many ZTE and Huwawei phones to begin with. Heck, even my company gives us older name brand phones from Apple and Samsung, like currently the Iphone 6s and Galaxy S7. ZTE mostly caters to the cheap pre-paid celluar market, so a total U.S. ban would decimate them for sure, but I don't think a government ban will. A government ban shouldn't affect your prices in CANADA at all.
    Reply