Dive Brief:
- Nokia and Ericsson are looking to set up new supply chains outside of China due to security concerns and to shield their business from the ongoing trade war, according to a report from The Telegraph.
- Nokia is reportedly likely to move its operations to the European Union while Ericsson is considering separate supply chains for sensitive components in the Eastern and Western Hemispheres, according to The Telegraph, which cited anonymous sources.
- The moves from two of Europe's largest technology companies come less than a month after the Trump administration issued an executive order which effectively banned Chinese tech manufacturer Huawei equipment from U.S. networks over fears of the Chinese government being able to access data from Chinese companies.
Dive Insight:
American politicians are concerned about the conduct of Chinese company Huawei, which also makes 5G technology, but the Trump administration has not released details on what makes the company a threat.
The order claims that "foreign adversaries are increasingly creating and exploiting vulnerabilities in information and communications technology and services...in order to commit malicious cyber-enabled actions, including economic and industrial espionage against the United States and its people."
After the order took effect, technology companies have taken steps to distance themselves from Huawei. Both Facebook and Google are among the companies saying they will no longer work as closely with Huawei to provide its software and applications on its phones.
These shifts by Nokia and Ericsson will be more difficult than simply not having an app pre-installed on a phone. Setting up new supply chains will be a long and expensive process. But as regulators show increased scrutiny of Huawei they may see it as their only option.
