February 11, 2021
Huawei Technologies, the Chinese telecommunications company, filed a lawsuit in the U.S. Court of Appeals for the Fifth Circuit asking for a review of last year’s FCC ruling that found it a national security risk. As a result of the FCC’s ruling, U.S. telecommunications operators were blocked from buying Huawei’s 5G equipment. Huawei has previously challenged numerous actions taken against it in recent years. The Trump administration blocked Huawei from accessing U.S. technology and encouraged allies to do the same.
The Wall Street Journal reports that the Huawei lawsuit against the December FCC ruling accused it of being “arbitrary, capricious, and an abuse of discretion, and not supported by substantial evidence.”
An FCC spokeswoman responded that it continued to defend the decision that identified “Huawei as a national security threat based on a substantial body of evidence developed by the FCC and numerous U.S. national security agencies.” Although U.S. officials have never publicly shown any evidence, they aver that China could “exploit Huawei telecom gear to spy or disrupt telecommunications networks.”
Huawei founder Ren Zhengfei, who has said that the company would not spy on behalf of the Chinese government, said “he hoped the Biden administration would be more open to policies ‘that are in the interests of U.S. companies,’ adding that he would welcome a phone call from the new president.”
Last month, Gina Raimondo, Biden’s nominee for Commerce Department secretary, “vowed to protect the U.S. against Chinese technology threats but declined to promise” to maintain the department’s blacklisting of Huawei “pending a review.”
The Chinese company has already challenged the FCC and U.S. laws preventing it from doing business with U.S. companies, with one 2019 suit against the FCC still continuing. “The legal efforts reflect Huawei’s push to exhaust all of its options as it faces the prospect of losing what remains of its foothold in the U.S. telecommunications market,” notes WSJ.
Previously, Huawei worked with U.S. rural telecom operators that “praised its prices and the dependability of its service,” but Trump made the company “a key target in his trade war with Beijing,” including issuing two criminal indictments “alleging that it stole technology and evaded sanctions on Iran.” Huawei chief financial officer Meng Wanzhou is still under house arrest in Canada resisting U.S. efforts to extradite her.
With no access to U.S. technology, “analysts have said Huawei is relying on stockpiled inventory to build its products.” The U.S. sanctions have particularly impacted its smartphone business, with “shipments of its handsets [falling] more than 40 percent in the quarter to December 31 from a year earlier.” But Ren said the company “managed to increase both profit and revenue last year … although it has yet to report its 2020 earnings.” In 2019, it “made about $9.7 billion in profit on more than $130 billion in revenue.”