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Huawei faces dilemma over Russia links that risk further US sanctions

Illustration including a Huawei logo, a smartphone, and keyboard.

The last time Western sanctions hit Russia after it annexed Crimea, President Vladimir Putin turned to Huawei to rebuild and upgrade the territory’s communication infrastructure. Now, the controversial Chinese technology company is positioned to aid the Putin regime on a much larger scale, despite the threat of Washington hitting it with more sanctions.

In Crimea, Russia “ripped out Western telecom gear in the heavily militarized territory and replaced it with Huawei and ZTE,” said Hosuk Lee-Makiyama, a telecoms expert at the European Centre for International Political Economy. If Nokia and Ericsson do fully exit Russia, Moscow would “need Chinese companies more than ever, especially Huawei,” he said.

Despite an initial plunge in phone shipments, Huawei has been an early winner from the Ukraine war. Its phone sales in Russia rose 300 percent in the first two weeks of March, while other Chinese brands Oppo and Vivo also recorded triple-digit sales increases, according to analysts at MTS, Russia’s largest mobile operator.

Its four Russian research centers are recruiting dozens of engineers, including machine-learning scientists in Novosibirsk, speech recognition researchers in St. Petersburg, and big data analysts in Nizhny Novgorod. Huawei has also added new sales and business development openings in Moscow since the invasion of Ukraine began, according to its website.

But experts say Chinese tech companies such as Huawei and rival Xiaomi risk violating sanctions if they keep shipping phones and telecoms gear to Russia. They need sign-off from Washington because the electronics often contain high-end semiconductors or are made with US tools, making them subject to new sanctions on Moscow.

Huawei could be hit with more sanctions from Washington—such as Trump’s order to ban ZTE from accessing any technology connected to the US—that would deliver another big blow to the Chinese company’s operations.

“My bet would be it’s impossible for [Huawei and other Chinese phone makers] to export legally to Russia,” said Kevin Wolf, a former commerce department official and sanctions expert.

“It is theoretically possible that [Huawei] has been able to figure out how to make a cell or base station without US tools, software etc. But it’s hard to believe they would be able to find all the [semiconductors] that were not made with US tools.”

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