UK announces ban of Huawei from 5G network

The United Kingdom has announced it will ban Huawei from its 5G network. Yahoo Finance's Akiko Fujita shares the details.

Video Transcript

JULIE HYMAN: Akiko, you have been closely following sort of all the different fronts in this corporate back-and-forth that-- you could call it a cold war potentially between the US and China. Another front, of course, is Huawei, which you've covered closely, and the UK is reversing its decision on whether it is going to be using Huawei. It's now said again that it's not.

AKIKO FUJITA: Yeah, this is a significant about-face for the UK and a big win for the US, which, as you know, has been pressuring its allies to ban Huawei from its 5G infrastructure. We got this news from the UK today saying that they are looking now-- banning all of Huawei equipment within its 5G infrastructure. They are calling on carriers to remove some of the equipment from Huawei that's already been installed within the infrastructure. And what's worth noting here is that the UK is doing this even as this is likely to delay the rollout of their 5G infrastructure by several years here.

The next thing to watch on this front though is going to be whether the European countries-- other European countries like Germany follow, because the US has been pressuring them heavily as well. And it's worth noting that yesterday, Huawei came out with their numbers for the first half of this year. A significant slowdown. They did post a 13% revenue growth, but that is significantly lower than the 23% growth that they saw last year, the slowest growth we've seen so far in the first half of the year since 2013. So we are starting to see the impact of all of these bans as well as the pressure from the US and other companies on Huawei that's starting to hurt their bottom line now.

ADAM SHAPIRO: Akiko, we know that the Chinese government has retaliated. For instance, I think two Canadians have been charged with espionage in retaliation for holding the Huawei executive who faces extradition. Where do we stand on the extradition? And might they retaliate against the UK or potential other countries that take these kinds of steps?

AKIKO FUJITA: Well, that's still a big question mark. I mean, as it relates to the extradition, things are pretty much in a holding pattern right now. Canada is one of those countries that have looked at banning the 5G infrastructure-- Huawei from that infrastructure as well. You know, there's no question the Chinese government is watching this very closely, trying to calculate that next move.

But with the UK, I mean, that is a significant win for the US. The Chinese government-- no question-- is going to be looking at the other European countries. Huawei has said that they have nothing to hide here; they are not a national security risk, but the dominoes could start to fall in the direction or in favor of the US against Huawei. At that point, it's no longer a US-Chinese tension we're talking about but China along with other countries in Europe as well, and that retaliation could take shape in a different form. Certainly something to watch.