Both the South Korean government and related industries seem to be perplexed by the Donald Trump administration's demand that S. Korea should refrain from using Huawei's equipment.
According to government officials on May 23, the U.S. State Department has recently expressed its position to S. Korea's Foreign Ministry through various channels that Huawei's equipment has security problems. The U.S. State Department reportedly asked for a complete ban on Korean companies from doing business with Huawei.
In response, the South Korean government is holding back on giving a definite answer, saying that the government is taking measures to prevent security-related problems from occurring.
The reason for the S. Korean government is taking a cautious approach is that it does not know what kind of aftereffects it might have from its actions in the face of intensifying U.S.-China trade conflicts.
Moreover, Korea, which suffered economic retaliation due to the THAAD scandal during the previous administration, has no choice but to be more careful about China-related policies.
The U.S. has warned that Huawei could pose a serious threat to its security by installing a "Back Door" (a device that infiltrates into computers and telecommunication equipment without certification procedures) on its own communications equipment under the direction of the Chinese government.
On May 16, U.S. President Trump signed an executive order targeting Huawei and other Chinese companies. It appears to have declared a state of emergency in response to threats to the country's information and communication technologies and services.
On the same day, the U.S. Department of Commerce put Huawei and its 68 affiliates on the list of companies that restricted transactions, and a series of IT companies representing the U.S., including Google, Intel, Qualcomm, Zeilings and Broadcom, have since declared a break in their dealings with Huawei.
However, the U.S. government has issued a "temporary license" to Huawei, which will suspend sanctions for 90 days to ease side effects from the sudden suspension of transactions. Currently, major U.S. allies, including Britain and Japan, are joining the anti-Hway front, and the Huawei boycott is expanding around the world.
Korea is also not free from the effects of Huawei's boycott. This is especially true because LG Uplus, one of the top three mobile carriers, is using Huawei's products to build 5G networks. Moreover, South Korea has already installed more than 20,000 Huawei 5G equipment.
Therefore, a prolonged U.S. sanctions will inevitably deal a blow to LG Uplus. In fact, the stock price of LG Uplus plunged in the stock market as news of the U.S. ban on trading became public.
"We already have supplies in areas where Huawei is going to establish 5G network. So far, we are not considering withdrawing Huawei`s equipment," LG Uplus said.
Meanwhile, Minister of Science, Technology, Information and Communication Yoo Young-min has been emphasizing localization of equipment since last year when the 5G commercialization plan was taking shape.