Artificial IntelligenceCryptocurrencyMetaverseCybersecurityTech Forward

Canada is banning Huawei from its 5G network, forcing telecom operators to scrap over $500 million of Chinese hardware

May 20, 2022, 7:46 AM UTC

Nearly five years after Australia prohibited Huawei Technologies from providing telecom equipment to its domestic network operators in 2018, Canada is set to become the last of the “Five Eyes” security alliance nations to eliminate the Chinese technology leader from their 5G rollout.

On Thursday, François-Philippe Champagne, Canada’s Minister of Innovation, Science and Industry, said that the country’s telecommunications firms would have until June 2024 to remove Huawei equipment from 5G networks, and until 2027 to remove equipment from 4G networks.

Canada will also ban products from Chinese technology firm ZTE Corporation. 

“The Government of Canada has serious concerns about suppliers such as Huawei and ZTE who could be compelled to comply with extrajudicial directions from foreign governments in ways that would conflict with Canadian laws or would be detrimental to Canadian interests,” Champagne said in a statement.

Huawei has been suspected of installing backdoors in its products that would grant the company unauthorized access to data. The telecoms firm has also been accused of having close ties to the Chinese government, as well as China’s military, the People’s Liberation Army. Huawei has denied these allegations.

With its ban, Canada is the last nation of the “Five Eyes” intelligence-sharing alliance to designate Huawei a concern to national security. The U.S., U.K. and Australia have all explicitly banned Huawei technology from domestic telecoms networks, while New Zealand has not technically banned Huawei outright but has rejected applications for its use in the country citing national security.

The U.S. has gone further in its pressure on Huawei, barring U.S. firms from supplying the company with components like chips, and barring any U.S. investment in the company. 

Canada has been evaluating Huawei’s presence in the country since September 2018, when it launched a review into whether Chinese technology presented a national security threat. The conversation about Huawei was quickly overtaken by the December 2018 arrest of Huawei Chief Financial Officer Meng Wanzhou in Vancouver. Canada placed Meng under house arrest after the U.S. filed an extradition request, accusing her of facilitating sanctions evasion.

Beijing later arrested two Canadians, Michael Kovrig and Michael Spavor, accusing them of committing espionage in China. Beijing tied the fate of Kovrig and Spavor to the outcome of Wanzhou’s case, placing Canada in an uncomfortable position between complying with the U.S.’s extradition request and protecting its arrested nationals in China.

Canada was reportedly holding off on announcing a decision on Huawei for fear of jeapardizing the safety of the two Michaels, detained in China.

The issue was resolved in September 2021, when the U.S. agreed to defer prosecution of Wanzhou, allowing her to leave Canada. Beijing immediately released Kovrig and Spavor.

Huawei did not immediately respond to a request for comment. But in an interview with CTV News, Alykhan Velshi, Huawei’s Vice President for Corporate Affairs in the Americas, said the move was “obviously disappointing,” but that it “only really targets one small and declining aspect of our business in Canada.” Huawei’s recent annual reports don’t specify what business operations the company has in Canada.

Canadian telecoms spent about $547 million on Huawei products between 2018 and 2020, according to Global News. On Thursday, Champagne said that Canadian companies would not be compensated for removing Huawei products. Huawei still sells software updates to Bell and Telus, and operates a research arm in Canada, reports the Wall Street Journal.

Canada’s telecoms companies were already shifting away from using Huawei products. Wireless providers Rogers Communications, Bell Canada and Telus Corporation have partnered with Telefonaktiebolaget LM Ericsson to build their 5G networks, despite Bell and Telus earlier choosing Huawei for their 4G operations.

China could still choose to retaliate against Canada’s decision. In a statement, China’s embassy in Canada said that the country “will take all necessary measures to protect the interests of Chinese companies.”

On Wednesday, China removed its controls on imports of Canadian canola seeds, which it implemented soon after Canada’s arrest of Meng Wanzhou.

Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.