Breaking news! The United States intends to allow cooperation with Huawei to develop 5G standards

On the evening of May 6, one year after Huawei was included on the US "blacklist", a breaking news sparked heated discussions among netizens.

Reuters quoted sources as saying that the US Department of Commerce is about to issue a new regulation to allow US companies and Huawei to jointly participate in the formulation of 5G network standards .

After the news came out, Huawei concept stocks in the US stock market rose one after another . Among them, Micron Technology, Qualcomm, and TSMC all performed well. When the A-share market opened on May 7, Huawei concept stocks also all rose . As of press time, 7 concept stocks have reached their daily limit, including Huaxing Venture, Acer Technology, Guanghua Technology, Bojie Shares, Guoen Shares, and Xinya Process.

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The U.S. Commerce Department is close to signing off on a new rule that would allow American companies to work with China's Huawei Technologies to set standards for next-generation 5G networks, Reuters reported.

Two sources told Reuters that after nearly a year of uncertainty, the department has drafted a new rule to address the issue. The rule, which could still change, would essentially allow U.S. companies to join the standards body of which Huawei is also a member, the sources said.

Wilson, senior director of Asia policy at the Information Technology Industry Council, which represents companies such as Amazon, Qualcomm and Intel, said the U.S. government wants U.S. companies to remain competitive in their competition with Huawei, "but their policies have inadvertently caused U.S. companies to lose to Huawei and other companies on the 'Entity List' at the negotiating table ."

According to industry insiders, after the U.S. Department of Commerce included Huawei in the "Entity List" in May 2019, the cooperation between U.S. companies and Huawei on 5G standards was affected, damaging the interests of U.S. companies themselves . Industry insiders and government officials said that the United States is at a disadvantage because when it comes to setting industry standards, American engineers are more "silent" than Huawei.

After the "Entity List", the United States banned American companies from drafting 5G standards with Huawei, which affected the United States' voice on 5G. The communication restrictions between American companies and Huawei are very strict, and the two sides cannot even communicate privately, which also affects the standard-setting related business.

The 5G standard is formulated through the 3GPP standards organization, in which Huawei has always been a member, and it is a global standard.

A report recently released by Boston Consulting Group titled "Restricting Trade with China Will End U.S. Semiconductor Leadership" pointed out that after the "Entity List" in May last year, the median quarterly revenue of leading U.S. semiconductor companies fell by 4% to 9% .

Industry insiders and U.S. government officials said that this would put the U.S. at a disadvantage. Some U.S. senior officials are eager to issue new regulations in the hope that the U.S. participation in 5G standard-setting will not be restricted by the "Entity List."

(Image source: Huawei official website)

The United States has been suppressing Huawei through various means, but Huawei's 5G orders are still among the best in the world. Although the United States has been lobbying its allies to refuse to allow Huawei to participate in 5G construction, the British government still stated that its decision to allow Huawei to participate in its 5G network construction is firm. Germany and the European Union also announced earlier that they would allow or not oppose Huawei's participation in 5G construction.

As of February 20 this year, Huawei has obtained 91 5G commercial contracts , more than half of which are in Europe, totaling 47, 27 in Asia, and 17 in other regions.

As for the United States, according to statistics from the Federal Communications Commission, nearly 25% of communication equipment in rural areas of the United States comes from Huawei and ZTE . On February 11, the Wall Street Journal reported that these operators are now quietly lobbying against the ban on Huawei equipment.

Carri Bennet, general counsel of the Rural Wireless Association, said U.S. carriers such as Sprint and T-Mobile have significant 5G ties to Huawei, which appears to run counter to U.S. national security concerns.

According to foreign media reports, the U.S. Congress passed the Secure and Trusted Communications Networks Act on February 28, which explicitly prohibits the purchase of communications network equipment from companies that threaten national security. Although the bill is aimed at Huawei, some rural operators said that if the $700 million allocation plan is not passed, they will not be able to replace equipment from other new manufacturers.

German patent data company IPlytics previously released a report on "Fact-check on 5G standard patent declarations". As of January 1, 2020, there were 21,571 5G standard patent declarations worldwide, of which Huawei had 3,147, ranking first . It surpassed Samsung (2,795), ZTE (2,561), LG Electronics (2,300), Nokia (2,149) and Ericsson (1,494).

In addition to achieving the world's first place in 5G patents, base station shipments, and 5G orders, Huawei is also constantly breaking through "spare tire" technologies. In order to further expand its advantages, Huawei has increased its investment in research and development expenses.

In 2019, Huawei's R&D expenses reached 131.7 billion yuan (about 18.6 billion U.S. dollars), accounting for 15.3% of its annual sales revenue, and it is expected to exceed 20 billion U.S. dollars in 2020. According to statistics, Huawei has invested more than 600 billion yuan in R&D expenses in the past decade , and nearly 30% of the R&D expenses are invested in innovation R&D, while 70% are used for product R&D; the overall R&D expenses account for 14% of the company's total revenue.

Even in the face of the difficult road of domestic substitution, Huawei still invests heavily in research and development and continuously improves its own research and development capabilities. Under numerous challenges, whether Huawei can completely break the foreign technology monopoly is also worth looking forward to.