ZTE Corporation

And this will hopefully push them to be more competitive.

And Huawei's direct competitor there is ZTE, right? The other sort of telecommunications company we hear somewhat less about, or is that no longer the case?

Yeah, yeah.

Probably in telecommunications equipment, ZTE is still its strongest domestic competitor.

But Huawei has since expanded to a number of other areas, including chips, including robotics and autos.

So it's sort of like a larger field of competitors that it has now.

But really, there are a decent number of other companies that all have to contribute SEPs.

So ZTE is another Chinese one.

Nokia is one.

Samsung, Ericsson, et cetera.

And maybe it's not good news for the U.S. company.

Do you think it's over-exaggerated?

Well, again, I would say that this is really not a bilateral issue, right? Because again, these companies like Qualcomm, like Huawei, Samsung, LG, ZTE, et cetera, they think in global terms, right? And I think that if the US did anything to undermine you know, the promulgation, the definition promulgation and implementation of global standards.

I think not only China would have a problem with that, but I would imagine Europe, Africa, other parts of the world would also, you know, have issues with that.

I think it's quite interesting to know who owns and controls the digital infrastructure in the Global South, and what does this ownership mean in practice.

In, in, in the Global South, there's no, it, it's not, uh, one-sided, but there's a lot of these digital infrastructure, especially the, on the, the services side that is owned by, uh, just by Western countries or especially, uh, increasingly by, by Chi-Chinese countries, um, that also often control the, the physical infrastructure because, uh, a few years ago we had these, all these discussions about, uh, Huawei and, uh, ZTE, uh, Chinese companies that were, uh, control that were very important for, for our own digital infrastructure, for example, in 5G networks.

And there was this whole, uh, political discussion, and we try to, uh, get them out of our own supply chains.

But in the rest of the world, these firms are still very, uh, important because they quite often give the best, uh, products at the best, at the cheapest price.

I know they're probably increasingly like to think of themselves as software companies.

But really, there's still a perception that Ericsson and Nokia and Samsung and Huawei and ZTE are their hardware guys.

You know, they make their money.

They make the actual radios.

And all of a sudden... after a year or two of, yeah, where's this going to go? Is it going to work? They were kind of back.

You know, everybody's all of a sudden talking about Ericsson with a more competitive product line.

And if you look at the increase in market share outside China, I mean, they often take China outside because it's a difficult market to compete in against Huawei and ZTE.

Now, there's obviously some geopolitical factors going on here as well that you just mentioned, i.e. people trying to get rid of Huawei.

It's from Shenzhen.

As they started owning that, they started to invest in FACE 3, the capital of which is injection, DJI, Tencent, Huawei, ZTE, and other companies.

So, these are actually the faces.

I remember, Beijing secondary, I said, I had no idea about Shenzhen.

The first prong directly amends the Canadian Telecommunications Act.

It grants the federal government the explicit authority to ban high-risk suppliers, frequently interpreted as vendors like Huawei or ZTE, and force telecommunications providers to physically remove their equipment from the national network.

I was reading the fine print on Bill C-8 in our source stack, and I couldn't believe this detail.

The legislation explicitly states that affected companies get absolutely no financial compensation for the loss of this equipment.

But then here is the kick.

Since 2018, the first Trump administration's export global tech campaign against Huawei and ZTE, and then the export control regime in the United States expanded during the Biden administration.

So we see continued policy consistence with regard to this broader technology strategic rivalry.

And the lesson that China, Chinese policymakers, as well as Chinese entrepreneurs, they learned, what they learned is that they cannot rely on the United States or any foreign suppliers for their core technology.

I often worry the US government overweights, is this widget coming from China compared to the other China-related vulnerabilities that might exist? And I've been thinking about this a lot recently in the context of telecom security.

And if you go back to Trump's first term and the Biden administration, there was actually a quite aggressive campaign starting under Trump's first term to make sure that we here in the US and in key allied countries were not using Huawei and ZTE telecom equipment in our networks.

And there was a FCC rip and replace initiative.

There was a ban, all these efforts to keep Huawei and ZTE out of telecom that I think were largely successful.

It did not go into the major telecom networks.

There was some progress in reducing it out of the rural telecom networks that, you know, had been buying some.

But if the strategic objective of all of that line of work was to prevent the Chinese from spying on our telecoms, abject failure, because they just, with Salt Typhoon, Vault Typhoon, hacked.

into American and European manufactured telecom network equipment and infiltrated to an incredible degree our telecom networks.

Non-cooperation means contempt of court.

Consider ZTE.

In 2017, they pleaded guilty to violating sanctions on Iran and North Korea, paying $1.19 billion in fines.

When the US ruled in 2018 that ZTE broke its promises, they imposed an export ban that nearly paralyzed the company.

How did they end up surviving in the end? They paid another billion dollars in fines, put up an additional $400 million in escrow, replaced their entire board of directors and executive management team within 30 days, and had to accept a U.S.-appointed compliance team to be stationed there for 10 years.

So if the U.S. sent people into Huawei to manage things, would the CCP likely agree to that? This involves state-level secrets, so the CCP would absolutely never agree to it.