US Attorney General William Barr made last week the suggestion that the US acquires Nokia (NASDAK:NOK) and/or Ericsson (NASDAQ: ERIC) in order to compete with China’s Huawei in the 5G race. After Barr’s suggestion for this investment, Nokia and Ericsson’s stocks rose significantly. While China has developed in Huawei a 5G network, the US still doesn’t have a network of its own. On the market of telecom kits, Nokia and Ericsson are 2 of Huawei’s mot notable competitors, this being the reason why Barr thinks they’re the best bet when it comes for the US to defeat China in terms of 5G connectivity.
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Not Everyone Agrees with Barr
Barr’s suggestion didn’t go well with everyone in the Trump administration. For example, Vice President Mike Pence believes there are other and more efficient ways for the US to counter China rather than acquiring Huawei’s competitors. Larry Kudlow, who’s an economic advisor for President Trump, also believes this wouldn’t be the smartest move. On Monday, after Pence and Kudlow said they don’t agree with Barr, Nokia and Ericsson’s shares starter to fall.
What’s all the Fuss with the 5G Technology?
The 5G technology is very promising, seeing it can improve the services provided by mobile phone companies and bring in new business opportunities for all the mobile network operators. Besides, 5G could also completely change the way autonomous driving works and improve Internet connections, so there’s no doubt it’s a technological innovation. The US obviously wants to be ahead of China when it comes to 5G’s adoption and rollout because this would mean it’s still a tech leader. T-Mobile (NYSE: TMUS), Sprint and AT&T (NYSE:T) are already making 5G deployments, with Sprint and T-Mobile wanting to merge for the US to remain a leader in the 5G competition.
The US Is Leading a Global Campaign Against Huawei
Aside from running a 5G rollout competition against China, the US is also leading the global campaign against the famous phone company Huawei. More exactly, the Trump administration wants US’s allies to keep Huawei away from the 5G markets in their country. Even so, the UK and the EU have imposed no restrictions for Huawei in their 5G markets. An investment in the giant’s competitors would keep China on a lower position in the 5G race, this being the reason why US companies are being encouraged to invest or acquire foreign phone companies like Nokia and Ericsson. The combined market capitalization of the Nokia and Ericsson is at around $50 billion, while Alphabet (NASDAQ:GOOGL), which is an US-based company, has $120 billion in its cash reserve, meaning it could buy them.
