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Analyst warns of China threat to global telecoms over Taiwan

Business news |
By Nick Flaherty


A European analyst is warning of China adopting similar tactics to Russia to disable western economies in the wake of rising tensions.

Leading US politician Nancy Pelosi (above, centre) visited Taiwan earlier this week and met with the chairman of chip maker TSMC, Mark Lui. The Chinese government responded with live fire exercises around the island that are still  on-going.

“China is not the same country it was 10 years ago, and Taiwan, home to 90 percent of the world’s semiconductor manufacturing, has geopolitical significance,” said John Strand of Strand Consult in Copenhagen, Denmark.

“Just as Russia exploits Europe’s dependence on gas, China will exploit the world’s dependence on its information technology industry. Just as Russia threatens to turn off the gas, China can also turn the screws with its IT products and services. Huawei and ZTE enjoy broad and deep installation in Europe, Africa, and Latin America,” he warns.

“Growing aggression by Russia and China have put infrastructure security for energy and telecommunications in centre stage. Policymakers recognize that the cost of Russian gas and Chinese information communication technology (ICT) is far higher than its seeming low price on the paper,” he said. “As we recognize Europe’s dependency of Russian gas, we should think similarly about dependence Chinese ICT.”

This is not an idle threat. Huawei has the leading market share of the 5G telecoms equipment according to the latest figures from Trendforce. At 29% Huawei leads Ericsson on 24% and Nokia on 21.5%.

China is the most active in investing in the 5G field with various cities promoting the construction of 5G base stations and integrating 5G into manufacturing. At the same time, they will focus on key industries such as 5G in medical care, industrial IoT, and government affairs to drive the implementation of 5G applications.

Concerns regarding geopolitical tensions in a number of countries mean that open-source networks are seen as the solution to the problem of supplier dependence, says TrendForce. Whether in terms of security or cost, open-source software is extremely critical to the development of 5G networks. In addition to improving operational efficiency, it can accelerate network resiliency deployment.

However both TrendForce and Strand Consult highlight that compared with a traditional Radio Access Network (RAN), Open RAN has more security issues.

“The situation in Taiwan should leave no doubt that People’s Republic of China (PRC) General Secretary Xi intends to deliver on his promise: join the PRC or else. He underscored the point by sending dozens of military jets into Taiwan airspace. However the PRC’s main form of intrusion is via telecom networks. Taiwan’s Ministry of Foreign Affairs reports that cyberattacks by the PRC increased 40-fold in 2020 from 2018. It has recorded 778,000 intrusions in 2020, or 2,100 per day.” 

He says the PRC could order Huawei and ZTE to interfere, slow, or shut down communications networks in countries with conflicting views to the PRC’s Taiwan policy. It need not look like a bold block but could be remote access enabled surreptitiously via kill switch on Chinese equipment inside a network component.

Many countries have implemented restrictions on Huawei and ZTE. These restrictions have followed extensive investigations which have uncovered many red flags including but not limited to the inability to establish the technical baseline that the systems are not compromised by backdoors, says Strand.

“Restricting the implicated firms and technologies is a prudent response from a nation which wants to protect the privacy, sovereignty, and security of its people and assets. This is hardly a new concept; NATO has never purchased Chinese fighter jets or Russian submarines or Huawei telecom equipment. It follows that in a world with a new threat landscape, policymakers need to review and update the standards for telecom network equipment,” he said.

“Some may argue that China would not shut down the networks built with Huawei and ZTE equipment; they are likely the same people who don’t find Putin or Xi problematic. In any event, Strand Consult cannot name one CEO who can guarantee that a network built with Chinese government equipment is free from Chinese government intrusion,” he said.

strandconsult.dk/;  www.trendforce.com

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