Huawei could be banned from 5G in Germany

Key Points
  • The German government is considering banning Huawei from providing 5G equipment in the country saying security concerns are of "high relevance."
  • The decision to ban Huawei 5G equipment would mark a shift from Germany, which has not been as vocal as other Western countries about security concerns.
  • Huawei says 5G security concerns are unfounded.
A man walking past a Huawei P20 smartphone advertisement is reflected in a glass door in front of a Huawei logo, at a shopping mall in Shanghai, China December 6, 2018.
Aly Song | Reuters

The German government is considering banning Huawei from providing 5G equipment in the country saying security concerns are of "high relevance."

The German Federal Foreign Office confirmed to CNBC an internal meeting about Huawei was held on Thursday.

"The security of the future 5G network is of high relevance to the Federal Government. The Federal Government will be guided by this in connection with the establishment of a future 5G network," The Federal Ministry of Economic Affairs and Energy told CNBC via email. It added no decisions have been made at this point.

German newspaper Handelsblatt first reported on Thursday that Chancellor Angela Merkel's administration is actively considering ways to exclude Huawei from the country's 5G networks. The decision would mark a shift from Germany, which has been less vocal than its Western allies, including the U.S. and the U.K., about Huawei security concerns.

Huawei is facing mounting fears that its 5G technology will enable Chinese espionage through the super-fast mobile networks. Both Australia and New Zealand have banned the telecommunications giant from supplying 5G equipment in their countries citing security concerns.

Huawei said in a statement Thursday evening, "we also welcome the approach of verification and standardization of technological solutions publicly communicated by the German Federal Government."

"We see no rational reason to exclude Huawei from building the 5G infrastructure in any country in the world," the statement said.

Also on Thursday, the University of Oxford said it would no longer accept new donations and sponsorships to fund research from Huawei.

"The decision has been taken in the light of public concerns raised in recent months surrounding UK partnerships with Huawei. We hope these matters can be resolved shortly," Oxford said in a statement.

German ban could spread across Europe

Bans from providing 5G equipment to the U.S., U.K. or Germany could be a big blow for Huawei, which is the world's largest supplier of telecoms network equipment. Huawei's business has so far proved resilient, with more than $100 billion in revenues expected in 2018.

The U.K. has been weighing a ban on Huawei 5G equipment with Britain's defense minister reportedly citing "grave concerns" over security. Meanwhile U.K. telecom firm BT has said Huawei will not be eligible to provide 5G infrastructure on its networks.

U.S. intelligence officials have advised consumers not to buy Huawei phones over concerns they could be used for spying.

James Chappell, co-founder and chief innovation officer at digital security firm Digital Shadows, told CNBC via email Friday that it was possible security concerns around Huawei may extend beyond Germany into other parts of Europe.

"Germany is one of the first EU countries to take this particular action beyond the 'Five Eyes' relationship," he said.

'Five Eyes' alliance groups Australia, Britain, Canada, New Zealand and the United States together as countries that share a broad range of intelligence.

"Given 5G's role in national critical infrastructure such as utilities and transport, it's understandable that geopolitical considerations are being bought into the discussion," Chappell said. "Germany is a member of NATO, and it is known to share intelligence with other NATO members which include the United States… I think it more likely that other NATO members in Europe respond (before EU member states.)"

22 EU member states are also members of NATO, including France, Italy, the U.K. and Belgium.

Chappell added that moving forward, Huawei would have to consider how to address the concerns raised in private with each of the EU partners.

Political controversy

Huawei has become increasingly enshrouded in controversy following the arrest of its chief financial officer, Meng Wanzhou.

Meng, the daughter of the company's founder Ren Zhengfei, was detained in Canada on Dec. 1. The U.S. is trying to have her extradited to stand trial on allegations of violating U.S. sanctions against Iran.

She was released on a 10 million Canadian dollars ($7.5 million) bail on Dec. 11 and remains in Vancouver, where she must wear an ankle monitor and comply with an 11 p.m. to 6 a.m. curfew.

The issue has been seen as yet another point of contention in the U.S.-China trade battle, as the two countries try to resolve their differences over a 90-day tariffs truce.

Why the US thinks Huawei has been a massive national security threat for years
Why the US thinks Huawei is a massive national security threat

-- CNBC's Ryan Browne contributed to this report.