Supply chains for mobile networks have become highly globalised, and as a result, are now at the centre of current geopolitical tensions – particularly in the area of mobile network vendors and chip producers.

To simplify what the supply chain for 5G telecom equipment looks like, we can divide it into general categories – each of which has particular importance in a specific geographical area:

This distribution of vendors and producers in different geographical locations has led to distinct dependency patterns, as countries require products or services from other countries. China’s telecom vendors, for instance, enjoy large shares of the European market for network equipment, and to some extent also in the US. However, China and Europe both rely on the US, and co-producing countries like Taiwan and South Korea, to produce the high-tech chips required in telecom equipment.

These complex cross-border dependencies have led to several tensions. Firstly, it has led to concerns from the US and its allies that the Chinese government could use vendor equipment to spy on networks, or even disrupt them. In 2019, the US government declared an export ban against Huawei, which forced US chip companies, like Qualcomm, and Taiwanese TSMC to halt supply – a development that could potentially limit the further global growth of Huawei. These high-tech components are crucial for the growth of Huawei. There are also suggestions that Chinese vendors might disrupt the market by receivingundue government support. The US government is promoting US companies to be become the leaders in the Cloud-RAN and Open-RAN markets – aiming to reduce the dependency on Chinese and European companies – and has designated funds for this purpose.

Supply chain dependency creates several problems. These dangers from dependence on other countries in telecom supply chains can be broadly categorised into the following risks:

• Cybersecurity of networks.
• Threats of espionage.
• Foreign regimes regulating European data.
• Political trust – not wanting to be dependent on countries with different political and legal regimes for key technologies.
• Competitiveness/antitrust – the potential for some vendors to receive undue government support, which would allow them to dominate external markets
• Trade – whether European vendors have access to the Chinese market

Naturally, there are also arguments in favour of using foreign, particularly Chinese, suppliers. Chinese vendors are technically advanced, and it would put Europe at a competitive disadvantage to exclude them – an argument that has been made by the association of telecom operators, GSMA. On the other hand, experts argue that European vendors (Nokia & Ericsson) are equally capable of manufacturing all of the components needed for 5G networks. In light of this, the EU has placed a focus on diversification of its supply chain, rather than implementing outright bans of foreign suppliers.