NEWS HIGHLIGHTS LOOKING EAST
Trade relations between the US and China have undoubtedly had an impact on the optical communications industry over the past 12 months. Te Trump administration placed Huawei on a trade blacklist early in 2019, citing national security concerns. Te ban was later liſted, meaning that Huawei was able to legally use Android on its devices and American component manufacturers were free to sell to the company again. However, the administration
then set higher tariffs of 15 per cent on Chinese imports. Tis came into effect in September and applied to around $112bn of Chinese imports. Tese tariffs are causing problems for module vendors, according to industry analyst firm, LightCounting’s post- ECOC research note. Some of the vendors at
the show said that they were looking to more aggressively move production outside China. LightCounting cited the example
of Innolight, one of Google’s key suppliers, which is now exploring production in two facilities outside of China. Shipping in the other direction, some US vendors (like connector companies) are seeing essentially all of their business in China disappear overnight as they struggle with 32 per cent tariffs. ‘Ultimately,’ said LightCounting,
‘we believe that tariffs are potentially helping to accelerate a trend that began years ago, as the cost of labour in China increased and manufacturers went looking for other places where labour remains relatively cheaper. Of course, as the manufacturing process for transceivers has become more automated, the cost of labour has become less relevant. What’s more important is that production (particularly final test and assembly) be completed in a “neutral” location from a trade policy perspective.’ Te research note also said
that the US/China trade dispute reinforces the sense that module makers remain a weak point
in the supply chain, further encouraging large customers like the hyperscale public cloud and ICP companies to try to exert more control. At the time of going to press,
the Trump administration is due to impose another round of 15 per cent tariffs on imports, covering practically all goods imported from China. In the UK, meanwhile, former
defence secretary, Gavin Williamson lost his post aſter a leaked report referenced plans to allow Huawei limited access to help build the UK’s 5G network. Something that Williamson denied. Te plan to allow UK carriers
to use Huawei in 5G wireless systems – while maintaining the privacy of more sensitive parts of the network – was in discussion during Teresa May’s tenure as prime minister. Aside from the leaked document, much controversy also surrounded the idea of allowing the Chinese company access to networks, particularly in light of the UK
seeking trade opportunities with the US post-Brexit. Tere were many calls for
tough restrictions, should this plan reach fruition, with worries about China’s involvement with critical infrastructure. People were equally concerned that it could delay upgrades and even push up costs. Any decision about Huawei
is unlikely to happen until 2020, due to the UK general election. According to reports from Bloomberg, UK intelligence agencies have argued that Huawei is a manageable risk – pointing to its embedded oversight board in Oxfordshire, which reports directly to the National Cyber Security Centre. But intelligence officials say it’s for politicians to decide whether the company’s oversight is at the correct level. Bloomberg reported that a
meeting of the National Security Council discussed the possibility of allowing Huawei access to the ‘non-contentious’ parts of the network, according to ‘a person familiar with its deliberations.’
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