China’s Huawei (SHE: 002502) has signed a deal with a Russian telecoms firm MTS. The pair will develop 5G technology in Russia in the coming year, according to reports.
Huawei stock is currently selling for $3.30 CHY—continuing a decline that began in April when shares sold for $5.21 CHY. This decline represents a loss of 36% in only three months.
Huawei Signs Deal with Russia
It was one of the first agreements made on President Xi Jinping’s three-day visit to Russia.
MTS said that the deal focuses on “the development of 5G technologies and the pilot launch of fifth-generation networks in 2019 and 2020.”
But the agreement has eyebrows raised overseas, as business between Huawei and the US remains blocked amid fears of spying and threats to US national security.
Huawei has faced intense international scrutiny in recent months, and this has affected stock price significantly. The company has attracted controversy for its central part in the US-China power struggle, which is currently playing out through a trade war and a technology sector war.
America has accused the Chinese company of being a covert for the Chinese government by using its equipment and phones to spy on the US. The phone-maker has always rebuffed these claims and says it is independent of the government.
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Allies Weigh In
As Huawei remains the world’s largest maker of telecoms equipment, it has business spanning the globe. However, the US has encouraged allies to block it. Other countries outside America such as Australia and New Zealand have also blocked Huawei from supplying equipment for 5G mobile networks.
As the trade war escalated recently, so did the US’s position on Huawei. The Trump administration added the company to its “entity list.” In doing so, it prohibits US companies from trading with the firm unless they secure a license first.
But black-listing Huawei has damaged US business too, as the company gets almost 50% of its smartphone chips from US supplies. This means several US companies will lose the business of a key customer as well as the development of 5G, considering Huawei plays a big role in its development.
What do you think of Huawei’s deal with Russia? Is it a move to anger the US?
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