7 February 2020Rory O'Neill

US govt considering Nokia/Ericsson takeover to counter China’s 5G lead

US attorney general William Barr says the US should consider securing a controlling stake in Nokia or Ericsson in order to combat Huawei’s dominance in the 5G infrastructure market.

Speaking at a US Department of Justice (DoJ) conference focused on China, Barr said yesterday, February 6, that China’s efforts to establish itself as a leading 5G provider were among the greatest threats facing the US.

The Trump administration has issued a ban on US companies doing business with Huawei, citing security concerns arising from Huawei’s status as a market leader in 5G infrastructure.

The US has called on its allies to do the same, but with limited success. The UK government last week announced that Huawei would be allowed to have up to a 35% market share in the provision of 5G tech in the country.

That decision was reportedly met with dismay by US president Donald Trump, who is said to have been “apoplectic” during a phone call with Prime Minister Boris Johnson.

But the main obstacle to banning Huawei, British officials argue, is the lack of a viable alternative.

Speaking at the US DoJ’s China Initiative Conference yesterday, Barr said that the US needed to “actively consider” securing a controlling stake in either, or both of, Nokia and Ericsson in order to ensure its allies had an alternative to Huawei.

“It's all very well to tell our friends and allies that they shouldn't install Huawei, but whose infrastructure are they going to install?,” Barr said.

“If we and our allies–and other countries that do not want to put their economic fate in China’s hands–are not going to install Huawei’s infrastructure, we have to have a market-ready alternative today.”

Huawei’s closest rivals in terms of 5G infrastructure are Nokia and Ericsson, although each has a lower market share.

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

This could be achieved through either a direct takeover by the US, or a “consortium of private American and allied companies,” he added.

“We and our closest allies certainly need to be actively considering this approach.”

Barr also claimed that China’s policy of “economic aggression and theft of IP” could be costing the US economy up to $600 billion annually.

IP-related issues were at the heart of negotiations which last month resulted in the signing of a phase one trade deal between the two countries.

China has committed to a range of IP reforms intended to assuage foreign corporations’ fears over the quality of IP protection in the country.

Chinese officials have consistently denied any state-sponsored policy of foreign IP theft, while experts have previously said that US allegations of forced technology transfer are exaggerated.

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More on this story

16 January 2020   China and the US have signed the first phase of a deal aimed at bringing an end to a trade war fuelled partly by concerns over IP theft and technology transfer.
10 June 2020   European governments have agreed to prioritise IP as they look to gain the upper hand in the race to lead the development of 5G telecommunications technology.
23 February 2021   The UK government has revealed plans to launch a new agency aimed at funding “high-risk, high-reward scientific research”.