• Huawei CEO Ren Zhengfei offered to sell the company’s 5G-related intellectual property in a bid to address concerns over potential cybersecurity vulnerabilities.
• The idea is intriguing but ultimately unlikely to result in any actual outsourcing deals; however, making the offer results in positive PR for Huawei in any event.
Huawei Chairman and CEO Ren Zhengfei caught the industry’s attention several weeks ago when he indicated, in an interview with The Economist, that he was open to selling Huawei’s 5G-related intellectual property to Western firms. This would theoretically enable these vendors to change software code and eliminate concerns over Huawei potentially inserting “backdoors” and other vulnerabilities into operator networks.
The comments by Ren were designed to address the ongoing cybersecurity concerns related to Huawei gear being raised by the U.S. and other countries. The timing is particularly crucial as operators in many countries are making decisions about which vendors they will move forward with for 5G radio and core. Huawei garnered significant LTE market share and is keen to retain those operators as they evolve into 5G. This includes in the UK, which has faced considerable pressure from the U.S. to align with the U.S. position against the Chinese vendors. Many of the operators in these markets are still anxious to take advantage of Huawei for radio access equipment even if they decide to go with another vendor within the network core, which can be considered the network “brains” where the bigger cybersecurity concerns are.
Pragmatically speaking, the Huawei CEO’s comments served multiple purposes:
1) Demonstrate confidence in the technical superiority of the company’s 5G intellectual property,
2) Tell potential operator/customers (and government regulators) that Huawei has nothing to fear or hide,
3) Potentially enable Huawei to garner 5G-related revenues from its IP, even in markets like the U.S., where it finds itself shut out as an actual supplier.
Having said that, it seems very unlikely that any of the current 5G radio and core vendors would express an interest in licensing Huawei’s 5G technology, because it would represent an admission that their own 5G IP was sub-standard. At the same time, it’s hard to envision a new vendor entering this space because the margins are already thin, and adding a new vendor would only exacerbate the situation. Regardless, the comments allow the Huawei CEO to generate positive PR for Huawei – advocating for and defending Huawei is a function that Ren has taken on in a major way in the past year after being a relatively quiet presence. Given the high stakes involved for vendors hoping to secure long-term 5G deployment deals, Huawei is wisely addressing cybersecurity concerns head-on with both operators and regulators.