Japan’s SoftBank to Shun Huawei in Favor of Ericsson, Nokia Equipment

December 13, 2018 Updated: December 13, 2018

TOKYO—SoftBank Group Corp plans to replace 4G network equipment from China’s Huawei Technologies Co Ltd with hardware from Nokia and Ericsson, Nikkei reported on Dec. 13, without citing sources.

The move comes at a time of heightened scrutiny of Chinese tech firms by the United States and some prominent allies over ties to the Chinese government, driven by concerns they could be used by Beijing for spying.

SoftBank, Japan’s third-largest telco, will also order equipment for its next generation 5G network from the two European suppliers instead of Huawei, Nikkei reported.

A SoftBank spokesman said the report was “based on speculation and no decision has been made.”

Nokia and Ericsson are already big suppliers to SoftBank.

It also has the longest running relationship with Huawei among Japan’s top three telcos, but the firm has previously said that the amount of equipment it uses from Chinese makers “is relatively small.”

Replacing the 4G equipment, which Nikkei reported will be done over several years, is likely to be time-consuming and expensive, industry sources have said.

The Nikkei report on the supplier switch comes as SoftBank is preparing to list its telecoms unit in Tokyo on Dec. 19.

This week, SoftBank’s telecoms unit priced its IPO at an indicated 1,500 yen ($13.22) per share and said would sell an extra 160 million shares to meet demand, raising about $23.5 billion in Japan’s biggest-ever IPO.

The report also comes on the heels of Japan issuing a policy document on maintaining cybersecurity during procurement.

While Huawei was not explicitly named, sources have said that the policy document was aimed at preventing government procurement from the company as well as China’s ZTE Corp.

Huawei has already been locked out of the U.S. market, and Australia and New Zealand have blocked it from building 5G networks amid concerns of its possible links with the Chinese regime.

In August, U.S. President Donald Trump signed into law the National Defense Authorization Act, which includes a provision to ban U.S. government agencies and contractors from using equipment and services from Huawei and ZTE, citing the risk for espionage.

In an April report, the U.S.-China Economic and Security Review Commission, a Congressional group, pointed to extensive ties between Huawei and the Chinese Communist Party. Huawei founder Ren Zhengfei was a former director of telecoms research in the Chinese military’s General Staff Department.

Japan’s decision to keep Huawei out would add to the woes of the firm, whose chief financial officer—Meng Wanzhou—was arrested on Dec. 1 by Canadian officials for extradition to the United States. She is accused of committing fraud in relation to skirting U.S. sanctions on Iran.

By Sam Nussey. The Epoch Times contributed to this report.