US may require companies make 5G equipment outside of China

It wouldn't be enough to use hardware from non-Chinese companies.

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REUTERS/Shannon Stapleton
REUTERS/Shannon Stapleton

The US isn't just skittish about American companies using equipment from Chinese companies in their 5G networks -- it might force companies to avoid Chinese involvement altogether. Wall Street Journal sources claim that the Trump administration is considering a requirement that 5G cellular gear for the US must be designed and made outside of China. To that end, officials are reportedly asking telecom firms if they can produce US-oriented equipment elsewhere.

The talks are in "early and informal" phases, the tipsters said. However, the executive order that dictated a review of the telecom supply chain is asking for proposed rules by an October deadline -- there isn't much time for things to change, even if any rules wouldn't take effect for a while.

The White House has declined to comment.

Whether or not there's any justification for such a cautious approach, the rationale would be clear. There have been fears that the Chinese government might ask factories and suppliers to insert surveillance code and backdoors into American networking hardware, giving it a chance to spy on American infrastructure, government bodies and individuals. There's no known evidence this is happening so far, but some aren't willing to take chances -- companies like Super Micro have moved production outside of China precisely to reassure wary customers.

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If a requirement like this did go ahead, it would add to the pressure for telecom hardware makers. Ericsson and Nokia are already moving production outside of China to avoid US tariffs, but now they wouldn't have much choice -- they'd either have to shift production or completely rule out US sales.

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