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Why Cisco Thinks US Should Leave Huawei Alone

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Mar. 18 2019, Updated 9:00 a.m. ET

America leading anti-Huawei push

Cisco Systems (CSCO) CEO Chuck Robbins suggested in a recent media interview that the ongoing push by some Western governments to exclude Huawei from supplying equipment for the building of their 5G networks was unnecessary, according to a Bloomberg report. The United States is leading a push against Huawei, and several American allies have heeded the call and banned Huawei technology from being used in their 5G network rollout.

The concern cited in the anti-Huawei movement is that the company could provide a backdoor for the Chinese government to spy on countries using its network products.

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Global infrastructure built on a mix of tech

According to the Cisco executive, it is not possible for Huawei to dominate the market for 5G equipment as feared. The executive pointed out that the world’s telecom infrastructure as it stands currently is built on a mix of technology sourced from different places like the United States, Europe, and China.

Huawei is the world’s top vendor of telecom equipment and had a 28% share of the global market in 2017, according to data from IHS Markit. Ericsson (ERIC), Nokia (NOK), and Samsung (SSNLF), the other major vendors of telecom equipment, captured 27%, 23%, and 3.0% of the global market, respectively, in 2017.

Cisco and Huawei are fierce competitors

Huawei is not only the top telecom equipment vendor, but it is also a leading supplier of core network gear such as routers and switches. Therefore, it is one of Cisco’s top competitors. Cisco made a profit of $2.8 billion in its second quarter of fiscal 2019, the period that ended in January. Arista Network (ANET), another prominent Cisco competitor, made a profit of $170.3 million in its fourth quarter, which ended in December.

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