Huawei Technologies Co. Ltd.'s latest efforts to convince the U.S. government to reverse a ban on its telecom network equipment may have little impact, analysts said.
CEO Ren Zhengfei said Sept. 26 that the Chinese company is willing to license its 5G technologies exclusively to a U.S. company, saying this would establish "a new starting line" in the race to roll out next-generation 5G wireless networks.
At the "A coffee with Ren" panel event in Shenzhen, China, Ren expanded on earlier comments that its source code could be modified by the buyer so that Huawei and the Chinese government would not be able to access any telecom infrastructure subsequently built.
"The offer will have no practical meaning [other] than branding strategy until a Western company is willing to buy it," said Nikhil Batra, senior research manager of the telecom team at IDC.
Theoretically, the offer should appeal to the U.S. government as it would give local companies access to Huawei's technology, which is deemed superior, analysts said.
According to a study by U.K. research institution GlobalData PLC, the quality of Huawei's equipment is generally higher than its peers'. It led in baseband capacity and the pace of technology evolution, for example.

Huawei's equipment portfolio is also the most comprehensive. No U.S. company is able to provide the same complete telecommunications stack, Batra said. Qualcomm Inc., Intel Corp. and Cisco Systems Inc. provide different parts of the 5G network, with the U.S. needing Huawei, Nokia Corp., Samsung Electronics or Telefonaktiebolaget LM Ericsson (publ) to fill in the gaps.
Nevertheless, U.S. companies are unlikely to accept Huawei's offer as they would not see a good return on investment, analysts said.
U.S. telecom carriers have signed 5G contracts with European equipment vendors Ericsson and Nokia and South Korea's Samsung. This has left little space for other vendors to join, meaning even if a U.S company paid a significant licensing fee for Huawei's technology, it would struggle to win enough contracts in the U.S. to make this worthwhile, the analysts said.
Ericsson and Nokia have reportedly discussed the possibility of cooperation with U.S. carriers, according to a June 26 report by The Express Tribune, an offshoot of The New York Times in Pakistan. Samsung confirmed it will provide 5G network equipment to Chicago.
At the same time, European telecom equipment vendors will find it hard to compete with Huawei in terms of market share and portfolio quality if they license its 5G patents and intellectual property, which will discourage them from accepting the Chinese company's offer, Edison Lee, TMT equity analyst at Jefferies, said.
Licensing cost
The cost of licensing Huawei's technologies will push vendors to increase their prices, which will make their equipment more expensive than Huawei's — in turn leading local telcos to pick the Chinese company, according to Lee.
"I think it is very unlikely that any of the current vendors would express interest in licensing Huawei's 5G technology because it would represent an admission that their own 5G IP was sub-standard," said John Byrne, service director of the telecom, technology and software team at GlobalData. But the timing of Ren's remarks earlier in September was no coincidence, he said. Operators in many countries are still deciding who they will partner with to roll out 5G.
The European Union's member states, the European Commission and the EU Agency for Cybersecurity will compile a 5G threat assessment by Oct. 1. This will be used to develop a toolbox of mitigating measures, due by year-end. Huawei is hoping its willingness to license its technology will convince European governments that its products are safe, the analysts agreed.
European telcos including Spain's Telefónica SA, France's Orange SA and Germany's Deutsche Telekom AG are all using Huawei's equipment, Kelly Hsieh, an analyst at Taiwan-based TrendForce, added.
Many operators in these markets are still anxious to take advantage of Huawei for radio access equipment even if they decide to go with another vendor for the network core, which can be thought of as the network's "brains" and is where the cybersecurity concerns lie, Byrne said.
