Huawei Technologies, one of the world's largest telecom equipment makers, is now facing a major criminal racketeering trial in New York that underscores the intensifying battle over technology export controls between the US and China. Jury selection began on Tuesday, with opening statements expected to follow, as prosecutors allege the Chinese company stole technology, plotted to steal US trade secrets, and committed wire and bank fraud, among other crimes.

What Exactly Is Huawei Accused Of?

The indictment against Huawei paints a picture of a company operating far beyond its public-facing business. Prosecutors allege that Huawei and its subsidiaries conducted business in North Korea despite US sanctions there, and installed surveillance equipment that helped Iran spy on protesters during 2009 anti-government demonstrations. The company also allegedly used a Hong Kong shell company called Skycom to sell equipment to Iran in violation of US sanctions.

One of the most high-profile aspects of the case involves Meng Wanzhou, Huawei's chief financial officer and daughter of the company's founder. She was arrested in Canada in late 2018 on a US extradition request but released in September 2021 as part of a prisoner swap that freed two Canadians held by China. As part of that deal, the US dropped its extradition request and agreed to dismiss fraud charges against her.

How Do Export Controls Affect Huawei's Business Today?

Huawei's troubles extend far beyond the courtroom. The company is banned from selling equipment to US carriers over national security concerns and has been blacklisted by other Western allies including Canada and Britain. These restrictions have forced the company to pivot its business strategy dramatically.

• Telecom Equipment: Once the world's biggest supplier of gear for wireless telecom networks, Huawei can no longer access most US processor chips and other critical technology needed for this core business.
• Consumer Electronics: The company still makes phones and other consumer devices, but this line of business has been severely constrained by export controls and international restrictions.
• Chipmaking Expansion: More recently, Huawei has expanded into chipmaking as the boom in artificial intelligence fuels demand for microprocessors, attempting to build self-sufficiency in semiconductor production.

The company's struggle to maintain market share under these sanctions has forced it to ramp up its own development of computer chips and other advanced technologies. This shift reflects a broader trend in which countries and companies targeted by export controls are investing heavily in domestic alternatives.

Why Is This Trial Happening Now?

The criminal charges against Huawei were announced in early 2019 during President Donald Trump's first term in office, when his administration raised national security concerns about the company and began lobbying Western allies against including Huawei's products in their next-generation high-speed wireless networks. The US has since expanded the allegations beyond the original charges.

Huawei's legal team has fought back aggressively, attempting to get the broad criminal case dismissed by arguing that the US allegations were too vague and impermissibly tried to extend American authority abroad. In a statement, the company said the narrative pushed by US prosecutors is "demonstrably false" and emphasized that "long-term investment in innovation, backed by the utmost respect for intellectual property, has been the driving force behind Huawei's business success".

Chinese officials have characterized the US approach as "economic bullying" and accused Washington of improperly using national security as a pretext for "oppressing Chinese companies".

What Does This Mean for Global Tech Competition?

The Huawei trial represents a critical moment in the broader US-China technology competition. Export controls on advanced semiconductors and AI chips have become a central tool in this geopolitical struggle, with the US attempting to prevent Chinese companies from accessing cutting-edge technology while simultaneously pushing allies to restrict their own dealings with Chinese firms.

The case also highlights the complexity of enforcing these controls. Huawei's alleged use of shell companies and intermediaries to conduct sanctioned business demonstrates how companies may attempt to circumvent restrictions, a challenge that regulators continue to grapple with as they refine export control strategies.

As the trial unfolds in New York, it will likely influence how the US and its allies approach technology export controls in the years ahead, particularly as competition in artificial intelligence and advanced semiconductors intensifies.