Chinese telecoms giant Huawei has told top European lawmakers that Warsaw and Bucharest risk violating EU law with new 5G security rules, offering a glimpse into possible court battles over new telecom security policies.

In a letter sent to EU competition chief Margrethe Vestager on September 11, the Chinese firm said proposed 5G security rules in Poland and Romania — two countries that have taken a hawkish approach to Chinese technology over the past year — "are predicated on several violations of EU law." The company also took aim at bilateral "joint declarations" that Warsaw and Bucharest signed with the U.S. administration.

Any legal challenge to national 5G security legislation in Europe would be a test case for Europe's nascent "technological sovereignty," the notion that Europe should be autonomous in the digital sector and not rely on foreign companies or governments. In a series of legislative initiatives EU lawmakers are walking a fine line between reducing Europe's dependency on foreign players like Huawei and U.S. cloud providers, and avoiding discriminatory bans on foreign companies that would breach the EU's and international open market policies.

In its letter, obtained by POLITICO through an access to documents request, Huawei argued Poland and Romania seek "to exclude suppliers on the basis of biased and ambiguous criteria targeting certain 5G suppliers because of their geographic origin."

"Huawei objects to these legislative proposals that are contrary to the fundamental principles of the EU," the company wrote.

Poland and Romania, which are in the process of adopting new 5G security rules, would breach EU treaties and principles of legal certainty and predictability, the firm argued. They are also depriving Huawei from the right to appeal decisions and are rigging spectrum auctions against EU telecom rules, it said.

The European Commission is coordinating the implementation of new 5G security rules across the bloc. While it doesn't have to power to stop countries from taking national security measures, it can intervene if governments impose telecom laws that breach EU-wide rules.

'Legally sound'

Huawei has previously challenged U.S. regulators' decisions that blocked it from the U.S. market, but so far has failed in its attempts to overturn those decisions in court.

In Europe, the company has largely played nice with national governments, hoping to fend off hard bans, but it has still seen market restrictions increase in past months.

Governments like France, Denmark, the Netherlands, Belgium and others have taken far-reaching steps to decrease Huawei's presence in 5G networks. Sweden even imposed an all-out ban on Chinese kit for large parts of its networks. Countries' actions follow a Europe-wide process to beef up 5G security with recommended measures in the EU's "toolbox" agreed at the start of 2020.

While Huawei has built a legal case against excessive measures, the Commission dismissed concerns about the measures being in violation of EU law.

"The EU adopted an objective and risk-based approach to 5G cybersecurity," a spokesperson for the European Commission said, adding that EU countries have committed to "objective and risk-based decisions" and "proportionate measures that are legally sound."

The EU's plan allows countries to impose rules through European telecoms legislation, the EU's law on cybersecurity in critical infrastructure and cybersecurity certification schemes, the Commission spokesperson said.

"These measures are non-discriminatory in the sense that they do not target any particular provider or country," the spokesperson added.

European countries have based a large part of new 5G security measures on the idea of pushing out "high-risk vendors." But they steered clear of naming Huawei and its smaller Chinese rival ZTE as the targets of their legislation and avoided mentioning China explicitly in public remarks — in large part due to concerns over legal repercussions.

Still, "member states have the right to decide whether to exclude companies from their markets for national security reasons," the spokesperson said.

US bilateral deals in crosshairs

The Chinese firm in its letter also took aim at bilateral deals signed between European capitals and the United States State Department — for whom severing links between its allies and China is a strategic priority. Huawei said Poland and Romania were "favoring U.S. national security priorities over EU policies" through the deals.

These agreements, called "joint declarations" or "memoranda of understanding," are essentially political pledges to push out suppliers that are subject to foreign influence, lack transparent ownership and have faced allegations of intellectual property theft in the past.

Washington had already signed similar deals with Romania, Poland, Estonia, Latvia, the Czech Republic and Slovenia. In its most exact diplomatic push this month, the U.S. got Slovakia, Cyprus, Bulgaria, North Macedonia and Kosovo to sign on as well.

None of the deals mention Huawei explicitly, but U.S. Secretary of State Mike Pompeo has been explicit on his trips about whom exactly the agreements are meant to shut out.

Nicholas Vinocur contributed reporting.

Hard disk drive maker Seagate was recently slapped with a $300 million fine by the U.S. Department of Commerce for violating US sanctions that applied export controls on products sold to Huawei, but that may be just the tip of the iceberg. Over the course of the last two weeks, a slew of law firms have filed class action suits against Seagate on behalf of shareholders who allege they were misled about the company selling millions of hard drives to the banned Huawei.

Those sales totaled $1.1 billion in revenue, of which Seagate profited an estimated $150 million. After paying $300 million for that transgression, the toll will become higher as the class action proceeds, alleging that Seagate made materially false and/or misleading statements to its shareholders about its business dealings with the Chinese tech company.

The U.S. government banned sales of a broad class of devices to Huawei back in 2019. Seagate's competitors, Western Digital and Toshiba, immediately ceased providing hard drives to Huawei. However, Seagate contended that its HDD sales were legal, even though Western Digital insisted the devices fell under the umbrella of US sanctions.

Seagate continued selling 7.4 million drives to Huawei from August 2020 to September 2021, even inking a rather unneeded deal to become Huawei's 'sole provider (no one else would sell to Huawei anyway). The issue eventually caught the attention of a U.S. Senator who called for an investigation. That finally lead to the $300 million fine that was levied against Seagate by the US Department of Commerce (payable in $15 million increments every quarter for five years).

These sorts of fines aren't good for the bottom line or for shareholder value. As such, multiple law firms are now soliciting lead plaintiffs for a class action lawsuit that has been filed against Seagate. We've seen calls for lead plaintiffs from 14 law firms over the last two weeks (1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14), so there's no shortage of legal representatives for those impacted.

To qualify, litigants will have to have experienced a loss on Seagate stock that was purchased between September 15, 2020, and October 25, 2022. The court will select a lead plaintiff on September 8, 2023, and the class action lawsuit will then proceed against Seagate. The lawsuit alleges that Seagate issued false and/or misleading statements about:

• The nature and magnitude of Seagate’s HDD sales to Huawei, including that Seagate experienced a significant acceleration in sales to Huawei immediately after the BIS rules went into effect and Seagate’s competitors stopped selling to Huawei; and

• That the underlying details of Seagate’s HDD manufacturing process, including the use of covered U.S. software and technology in “essential ‘production'” processes, rendered its sales to Huawei in violation of the BIS export rules

• As a result, Seagate was in blatant violation of the BIS export rules which resulted in an ongoing investigation by the U.S. Department of Commerce and exposed Seagate to hundreds of millions of dollars in fines and penalties.

• As a result, Defendants’ positive statements about the company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.

The lawsuit comes amidst what could be easily defined as a challenging time for Seagate, as the industry-wide slump has led the company to recently announce sweeping layoffs. We've reached out to Seagate for comment and will update as necessary.

BREAKTHROUGHS

Dual-Action Switch Cuts Clutter

The IntelliTac dual-action dome switch provides two electrical functions within a single low profile.

Reducing the size and number of components in a medical device can help lower manufacturing costs and, ultimately, make the part more user-friendly. Combining functions within a part is one way to reduce component clutter. For example, IntelliTac technology provides two electrical functions within a single low-profile switch. According to Snaptron Inc., the metal tactile-dome unit is the first dual-action dome switch in the industry.

“The real estate OEMs have is limited,” says Jon Mullett, a Snaptron marketing specialist. “They’re trying to put as much functionality into a device [as they can] without making it big and clunky.” The low profile of the IntelliTac switch can help keep a design flat and sleek. It can also replace bulky knobs or more-expensive and complex switches.

Snaptron’s switch is similar to dual-action tactile switches that activate the shutter of a camera, which typically consist of two domes in a housing with an actuator. However, according to the manufacturer, its dome contact is less complex and has a lower profile. Its size and actuation force can be customized by the supplier, and software can be used to customize the way in which it performs the two electrical functions.

The switch is a four-legged dome with three legs that sit on a flat electrical pad on the printed circuit board and a fourth, shorter leg. When light pressure is applied, the first contact is made and the first electrical function is performed. Applying further pressure causes the dome to snap and create the second electrical contact and function.

If incorporated into a surgical tool, this function combination could be used to provide short bursts of power with the first contact and sustained use with the second. Or, the light-touch function could be used to scroll on a device display, as on an insulin pump, and then the second contact could select the option the user wanted. Software can be programmed to make the switch’s second function occur only when the first has made contact for a certain amount of time. This safety feature could benefit such devices as surgical tools or the injection component on an insulin pump.

The dual-action switch can also be incorporated into devices to allow engineers to service equipment diagnostics from the front of the machine. To service equipment, a separate button is typically used, or the actual switch housing must be opened up. “Some medical devices have complicated control panels. [This switch] allows the serviceability, or at least the diagnostics, of the equipment to be accessed from the front [of the machine],” says Walter Goodrich, applications engineer for Snaptron.

Currently, the company offers the four-legged dome in diameters ranging from 6 to 30 mm, and in activation forces from 40 g to 15 lb.

Snaptron Inc., Windsor, CO
www.snaptron.com

Copyright ©2007 Medical Product Manufacturing News

The German government is preparing a massive investment plan to boost the development of local telecoms firms, in an effort to pivot away from dominant suppliers like China's Huawei.

The plan, dubbed the "joint proposal for action" by the ministries of interior, economy, research and transport, and seen by POLITICO, lays out how the government plans to spend €2 billion in funding from its larger coronavirus recovery stimulus program presented in June.

"The prosperity and competitiveness of Germany and Europe will increasingly depend on mastering new communication technologies," the proposal said, adding that this would "require a common political and industrial commitment at national and European level."

The plan comes as European governments increasingly take steps to box out Chinese tech giant Huawei from 5G-rollout plans due to security concerns. The restrictions mean telecoms operators have become more reliant on Sweden's Ericsson and Finland's Nokia, triggering calls from telecoms operators and some lawmakers to open up the supply chain to new players.

The German draft proposal includes over €300 million of investment in Open RAN technology, €237 million for a 6G research hub and €250 million to boost demand and expand 5G networks.

The draft also earmarked €550 million of German public investment in Europe's microchip market through a joint project, announced Tuesday, between the government, the EU and local industry players.

The draft proposal was first reported by Handelsblatt.

Looking for new 5G

The government wants to prioritize "open RAN" technologies throughout its telecoms investment plan, a concept that would chop up the 5G supply chain into smaller pieces and break the market power of large end-to-end vendors like Huawei, Ericsson and Nokia.

Ericsson and Nokia "for long have held a globally good position," the text said, but "China is however technological frontrunner in 5G mobile networks."

"Germany and Europe need to urgently strengthen their competences and develop industrial ecosystems for Open RAN and 6G technologies, including hardware and software," it said.

The adoption of Open RAN could mean a blow for Ericsson and Nokia, which have benefited from the pushback against Huawei. But the concept is heavily favored by telecoms operators, who use the equipment and complain that they are too reliant on gear from the two European suppliers.

The plan seeks to facilitate "Germany's entry into technologies for Open RAN solutions," with hopes to establish new companies in niche markets like network integration and edge computing software.

These services and products are currently part of major contracts between operators and major vendors like Huawei, Ericsson and Nokia.

Experts have warned that the Open RAN technology is still immature and it could take years for these new types of networks to function as well as conventional 5G systems.

But the concept has gained influence in countries including the U.S. and the U.K., where lawmakers sought ways to replace Huawei.

In the European Union, Germany so far has been among the most eager to promote the concept — which is also heavily favored by its telecoms giant Deutsche Telekom as it looks to exit its dependency on Huawei equipment.

Microchip plan

Also on Tuesday, the German government said it wants to boost the German and European semiconductor industry with new EU, German and private investments to boost chip manufacturing and design firms.

“We want Germany and Europe to become more sovereign and independent of imports when it comes to microelectronics and communication technologies," Economy Minister Peter Altmaier said in a statement, announcing the government's plan to launch a so-called Important Project of Common European Interest (IPCEI), elected projects that are set up to allow EU and national public funding to help private companies develop new technologies like microchips..

The global semiconductor supply chain is dominated by U.S., Taiwanese, Chinese and Korean firms. Europe lags far behind in the supply of high-end chips, though it has a handful of companies that champion supply-chain niches like chip-printing machines and chips for cars.

The German call to launch an IPCEI project comes in the wake of warnings by its car industry last month that a chip shortage was disrupting its production.

The European Commission is also working on a strategy to catch up on chips. It launched discussions with Europe’s leading firms in a bid to launch an “alliance” of firms, institutes and national governments to pool investments and set up joint projects this spring, including a manufacturing plant for high-end chips.

This article was updated to reflect that Important Projects of Common European Interest are approved under EU state aid rules.

BEIJING — (AP) — Chinese tech giant Huawei on Friday reported its revenue rose 3% over a year earlier in the first half of 2023 and its profit margin widened despite sanctions that block access to U.S. processor chips and other technology.

China's first global tech brand has responded to U.S. curbs that devastated its smartphone brand by increasing emphasis on selling network gear to hospitals, ports, electric car brands and other industrial customers it believes will be less vulnerable to sanctions.

Revenue in the six months ending in June rose 3.1% to 310.9 billion yuan ($43.1 billion), Huawei Technologies Ltd. said. It gave no profit figure but said its profit margin was 15%, which would be about 45 billion yuan ($6.5 billion) and an increase over the 4.3% margin in the first quarter of this year.

Sales by its infrastructure unit were 167.2 billion yuan ($23.2 billion), according to Huawei. Consumer sales were 103.5 billion yuan ($14.3 billion). Sales by the fledgling automotive unit, which supplies network and other technology for electric cars, were 1 billion yuan ($138.6 billion).

Huawei struggled after then-President Donald Trump cut off access to U.S. processor chips and other technology in a feud with Beijing over technology and security. American officials say the company is a security risk and might facilitate Chinese spying, which Huawei denies.

In 2020, then-chairman Eric Xu said the company was “back to business as usual” despite sanctions.

The company is the biggest global maker of network equipment for phone and internet companies. It sold its lower-priced Honor smartphone brand in 2020. It still sells handsets under its Huawei brand but focuses on the China market while sales abroad have plunged.

Huawei reported earlier 2022 profit fell 70% to 35.6 billion yuan ($5.2 billion) while sales rose 0.9% to 642.3 billion yuan ($93.5 billion).

Half of Huawei’s 207,000 employees work in research and development. The company says it has been able to develop replacements for U.S. components. Huawei says it has made breakthroughs in developing its own design tools for processor chips.

Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

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