A-G calls for US stake in Nokia, Ericsson to counter Huawei

He urges US, allies to consider this approach as Chinese firm leads 5G race

PHOTO: AGENCE FRANCE-PRESSE
US ATTORNEY-GENERAL WILLIAM BARRPHOTO: AGENCE FRANCE-PRESSE

WASHINGTON • US Attorney-General William Barr said the US and its allies should consider the highly unusual step of taking a "controlling stake" in Finland's Nokia and Sweden's Ericsson to counter China-based Huawei's dominance in next-generation 5G wireless technology.

In a remarkable statement underscoring how far the United States may be willing to go to counter Huawei Technologies, Mr Barr disclosed in a speech at a conference on Chinese economic espionage on Thursday that there had been proposals to meet the concerns "by the US aligning itself with Nokia and/or Ericsson".

He said the alignment could take place "through American ownership of a controlling stake, either directly or through a consortium of private American and allied companies".

"Putting our large market and financial muscle behind one or both of these firms would make it a far more formidable competitor and eliminate concerns over its staying power," added Mr Barr.

"We and our closest allies certainly need to be actively considering this approach," he said at the event hosted by Washington's Centre for Strategic and International Studies (CSIS).

Both firms have a combined market capitalisation of about US$50 billion (S$70 billion) and it is not clear what source of funds the US government could potentially tap to take stakes in the firms or if foreign regulators would approve.

Ericsson declined to comment, while Nokia did not immediately comment.

The companies' shares edged higher after Mr Barr's comments in European trading.

Last month, a group of six US senators introduced legislation to provide more than US$1 billion to invest in Western-based alternatives to Chinese equipment providers Huawei and ZTE and accelerate development of an open-architecture to allow for alternative vendors to enter the market for specific network components.

Mr Barr said China had emerged as the "top geopolitical adversary" and added: "China has stolen a march and is now leading in 5G... They have already captured 40 per cent of the market and are now aggressively pursuing the balance."

US government investments in public companies are rare except in the case of bailouts to save ailing firms and jobs. Such investments in foreign companies are even rarer.

US officials have criticised Huawei for its close ties to the Chinese government, and added the company to an economic blacklist last year, saying it was involved in activities contrary to US national security.

BUILDING STRENGTH

Putting our large market and financial muscle behind one or both of these firms would make it a far more formidable competitor and eliminate concerns over its staying power.

US ATTORNEY-GENERAL WILLIAM BARR, calling for the US to align itself with Nokia and/or Ericsson.

The Trump administration has pressed nations not to grant Huawei access to 5G networks and alleged that Huawei's equipment could be used by Beijing for spying, which the Chinese company has repeatedly denied.

US President Donald Trump signed an executive order last year barring US companies from using telecommunications equipment made by companies posing a national security risk.

At the same CSIS event, Federal Bureau of Investigation (FBI) director Christopher Wray said Beijing was seeking to steal American technology by "any means necessary".

He said the bureau currently had about 1,000 open investigations of Chinese technology theft across its 56 regional offices, while FBI counter-intelligence chief John Brown said it had arrested 24 people last year in China-related cases and another 19 this year.

Mr Wray said the investigations spanned "just about every industry sector" and the threat needed to be addressed through action across the whole of the US government.

China was aggressively exploiting US academic openness to steal technology, using "campus proxies" and establishing "institutes on our campuses", added Mr Wray.

Mr William Evanina, director of the National Counterintelligence and Security Centre, said that among China's priorities was stealing US aircraft and electric vehicle technology.

REUTERS

A version of this article appeared in the print edition of The Straits Times on February 08, 2020, with the headline 'A-G calls for US stake in Nokia, Ericsson to counter Huawei'. Subscribe