UK identifies fresh Huawei risks to telecom networks

Britain has identified "significant" issues in Huawei's engineering processes that pose "new risks" for the nation's telecommunications, a government report found Thursday amid lingering global suspicion over the Chinese technology giant.

"Further significant technical issues have been identified in Huawei's engineering processes, leading to new risks in the UK telecommunications networks," read annual findings from the Huawei Cyber Security Evaluation Centre (HCSEC) oversight board.

Huawei is the leading manufacturer of equipment for next-generation 5G mobile networks with almost instantaneous data transfer that will become the nervous system of Europe's economy, in strategic sectors like energy, transport, banking and health care.

However, some Western nations have barred it amid fears Beijing could gain access to sensitive communications and critical infrastructure.

A Huawei spokesman on Thursday told AFP that it was taking the British concerns "very seriously" and they would be used as part of its "ongoing" process to improve its capabilities.

HCSEC stressed that in the report that it "does not believe that the defects identified are a result of Chinese state interference".

- 'Limited assurance' over risks -

The board added however that "no material progress has been made by Huawei in the remediation of the issues reported last year".

And it concluded: "Overall, the oversight board can only provide limited assurance that all risks to UK national security from Huawei's involvement in the UK's critical networks can be sufficiently mitigated long-term."

HCSEC was formed in 2010 to mitigate perceived risks arising from the involvement of Huawei in critical national infrastructure.

The government-led board includes officials from Britain's GCHQ cybersecurity agency as well as a senior Huawei executive and representatives from the UK telecommunications sector.

Thursday's report "details some concerns about Huawei's software engineering capabilities", the Huawei spokesman added.

"We understand these concerns and take them very seriously.

"The issues identified... provide vital input for the ongoing transformation of our software engineering capabilities," he told AFP.

The spokesman also noted that Huawei's board of directors had last year launched a company-wide $2.0-billion (1.8-billion-euro) transformation plan to enhance those capabilities.

"The mechanism of collaboration between Huawei and the UK government continues to work properly -- the identification of the issues in the OB report is an indication of the HCSEC model working properly," he insisted.

- EU plan for safe 5G -

Thursday's report was published two days after the European Commission presented its plan to ensure the secure introduction of 5G telecoms networks.

The Commission has not yet urged European countries to follow the example of the US, Australia or Japan in banning or restricting deals with the firm.

However, it will now take steps to determine the extent of the risk and encourage EU members to share information.

The plan calls for member states to report back on any security threats to their national network infrastructure by June 30.

After that, the European Agency for Cybersecurity (ENISA) will be given to October 1 to produce a report evaluating the risks at a European level.

Then member states will debate what if any measures to take, with a decision before the end of the year.

Huawei stands accused by the United States of posing a security risk to western networks, because of its alleged ties to Chinese intelligence.

Nevertheless, some European countries are in negotiations with Huawei to deploy its advanced technology to power the faster wireless networks of the future.

- 'Five Eyes' under threat? -

Washington has banned Huawei's 5G technology from its territory and has urged its allies to follow suit or face losing some of their own access to American intelligence.

The New York-based Soufan Group, which compiles security assessments, warned that the use of Huawei technology could have "repercussions" for member nations in the so-called Five Eyes intelligence sharing collective.

All five members -- Australia, Britain, Canada, New Zealand and the United States -- have taken at least some steps toward limiting Huawei's role in sensitive infrastructure.

"The United States and many others fear using Huawei is essentially allowing the Chinese government to access sensitive or vital systems and infrastructure," said the Soufan Group in a commentary.

"Some of the Five Eyes are still considering using Huawei in some fashion, a choice that could have enormous repercussions for the entire group."

Huawei vows to 'shake off' pressure as network business takes a hit
Shenzhen, China (AFP) March 29, 2019 - Chinese telecom giant Huawei vowed on Friday to "shake off outside distractions" as it announced that its telecom infrastructure business contracted slightly in 2018 amid a global US campaign to blacklist the company over espionage fears.

Huawei said net profit rose to 59.3 billion yuan ($8.8 billion) last year, up 25 percent.

But its carrier business, which supplies telecom infrastructure to much of the world, posted a rare decline, suggesting that the US pressure could be having an impact.

The company's carrier business was down 1.3 percent on the year, compared to growth of 2.5 percent in 2017 and annual increases typically in excess of 20 percent in years past.

Huawei is the leading manufacturer of equipment for next-generation 5G mobile networks that will bring near-instantaneous connectivity for smartphones, but faces pushback in some Western markets over fears Beijing could gain access to critical infrastructure.

"Security concerns are having an impact on Huawei, as more and more countries place restrictions on the firm's network gear," said Brock Silvers, managing director of Kaiyuan Capital.

"Moreover, the US-led global movement has only just begun and is unlikely to quickly recede even in the event of a trade war agreement."

Huawei's annual report, released at corporate headquarters in the southern city of Shenzhen, did not detail what caused the carrier business decline or make clear reference to the global pressure.

But the company vowed to press ahead.

"Moving forward, we will do everything we can to shake off outside distractions, improve management and make progress towards our strategic goals," rotating chairman Guo Ping said.

Huawei also is grappling with the December arrest by Canada of chief financial officer Meng Wanzhou, daughter of company founder Ren Zhengfei, on US charges that she and Huawei circumvented sanctions against Iran.

Two affiliates also were charged this year with stealing trade secrets from telecom group T-Mobile in a separate case.

- 'No risks' -

Guo reiterated Huawei's insistence that it poses no security risk and sought to play up the company's trustworthiness.

"No government or any third party holds shares in our company or intervenes in our operations and decision-making," he said.

He also hinted that Huawei's market dominance made it a crucial player in the global 5G rollout that could not be sidelined.

"We are confident that the companies that choose to work with Huawei will be the most competitive in the 5G era," he said.

"Countries that choose to work with Huawei will gain an advantage for the next wave of growth in the digital economy."

He said Huawei signed more than 30 commercial contracts for 5G in 2018 and shipped more than 40,000 5G base stations to markets around the world.

Overall revenue grew 19.5 percent while sales in Huawei's consumer business, consisting largely of smartphones, surged 45 percent.

Huawei hit back at Washington earlier this month by suing the United States over a law barring US government agencies from engaging with Huawei or with third parties that use the company's products, which has crippled Huawei in that lucrative market.

Washington has long considered Huawei a potential threat due to the background of founder Ren, a former Chinese army engineer.

Those concerns have escalated as Huawei has risen to become the world leader in telecom networking equipment and one of the top smartphone manufacturers alongside Samsung and Apple.

Huawei has vowed to never allow security "backdoors" in its products which could be used for espionage or sabotage, and insists Washington has never produced evidence substantiating claims of security risks.

Huawei's annual report mentioned the US legal troubles only in vague terms under the heading "Contingent Liabilities".

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