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Huawei crackdown

Huawei hits back at exclusion by global standards bodies

Chinese tech giant says 'majority' of global cooperation unaffected

Having a voice in setting new standards is important for tech companies looking to compete globally. (Photo by Rie Ishii)

TOKYO/TAIPEI -- Huawei Technologies has hit out at the decision of several global standards-setting bodies to freeze out the company, saying the moves lack "any legal basis" and will hinder development and raise costs for the broader tech industry, the Chinese tech giant has told the Nikkei Asian Review.

Huawei added that such moves will not affect the company's daily operations, or its ability to provide competitive products and services.

Organizations such as the SD Association and the Wi-Fi Alliance curtailed Huawei's access at the end of last week following the U.S. government's clampdown on the company, while JEDEC, which sets rules for the semiconductor industry, said Huawei had voluntarily suspended its participation in the group.

"Huawei has not violated the articles of association for any of these organizations, and yet a small group of them have decided to suspend collaboration without any legal basis," the company said in an email to Nikkei on May 27. "Ultimately, decisions like this will result in fragmented standards, including fragmentation in information and communications standards, and will only serve to drive up costs and risks for everyone along the value chain."

Standards organizations play an important role in setting the common rules and guidelines for various technologies to ensure compatibility across makers and markets. Those involved in the decision-making process include experts in the relevant field as well as industry figures -- often from deep-pocketed Western companies, according to industry insiders.

The Wi-Fi Alliance, for example, sets the standards for wireless technology and counts Apple, Qualcomm, Broadcom and Intel among its members. The alliance said it had "temporarily restricted" Huawei's participation in activities covered by Washington's blacklisting of the company.

The SD Association, meanwhile, told Nikkei that it was "complying with U.S. Department of Commerce orders." The association is known for developing the standards of the SD Card, the most popular memory card format used in portable devices.

The Commerce Department added Huawei to its so-called Entity List, which means American companies must receive a special license to do business with the Chinese company.

Adhering to global standards is vital for a company looking to sell its products in overseas markets, where compatibility is key. Being kept out of debate on future standards means Huawei could end up having to follow guidelines it had little or no say in crafting.

Huawei's warning about "fragmented standards" is not without precedent.

One recent lesson in the risks of competing standards is the clash over which format would become the standard for high-definition video discs: Blu-Ray or HD DVD. Toshiba, which had developed the latter format, conceded the battle in 2008 when it discontinued its HD DVD business. A similar battle played out between VHS and Betamax videotape formats some four  decades before.

A company can always develop its own technology outside of globally accepted standards, as Huawei seems to have done with its NM Card, a smaller version of the micro SD Card that is used in its smartphones. The draw back, again, is a lack of guaranteed compatibility with other companies' products.

The long-term effects of these organizations' moves, however, may go well beyond Huawei, with market watchers warning that the intensifying U.S.-China trade tensions could deepen the growing technological divide between the world's two biggest economies.

"It is foreseeable that Chinese tech companies will choose not to join the technology alliances led by the U.S. in the future," amid the ripple effect of the ban on Huawei, Jonah Cheng, chief investment officer at J & J Investment, and a former veteran tech analyst at UBS, told Nikkei.

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