BREAKINGVIEWS-Technological Cold War takes strange Web 1.0 turn

By Sebastian Pellejero

NEW YORK, March 27 (Reuters Breakingviews) - Washington's technological arms race with China has reached an unlikely target: home wireless routers. The Federal Communications Commission moved to ban new overseas-made models from stores, using the same tools that pushed Huawei out of U.S. telecom. Reshaping yet another supply chain while leaving existing devices in place exposes some of the folly of this modern Cold War.

TP-Link, started three decades ago by co-founder and CEO Jianjun Chao in Shenzhen, dominates the U.S. consumer market. The company seems to be the primary concern for regulators, but others will be swept up in the policy. FCC Chairman Brendan Carr this week added routers to the agency's "Covered List" of equipment and services considered national security risks, effectively shutting them out of the United States.

Manufacturers seeking permission to keep selling into the market can apply for approval, a process requiring both product scrutiny and a credible plan to move production to the United States. None qualify now, according to Matt Wyckhouse of Finite State, a hardware security consultancy.

The questions are serious. State-backed hackers such as Volt Typhoon have used compromised routers to infiltrate critical infrastructure. TP-Link was cited in congressional testimony and state lawsuits as a potential vector, allegations the company rejects. It notes that documented attacks have hit competing products from rivals Cisco CSCO.O and Netgear NTGR.O.

TP-Link has worked to distance itself from its Chinese origins, restructuring ownership and establishing California headquarters in 2024. The FCC remains unconvinced and other authorities have raised related concerns.

Rival Netgear's shares initially jumped 15% as investors spotted opportunity, but later ceded the gains. Broadband operators stand to benefit more as shelves empty and customers lease equipment. This will probably come at a cost to stretched household budgets. TP-Link built its 31% market share, per data cruncher Circana, on prices competitors struggled to match.

The policy also has structural flaws. Millions of Wi-Fi gizmos built abroad will stay plugged in across the country. Moreover, shifting production is largely cosmetic: microchips inside come from Taiwan.

Connected vehicles provide a better blueprint. The Commerce Department targets specific components rather than blocking all international vendors. Making security certifications mandatory would also be cleaner.

Drones are instructive, as well. The same sweeping mechanism now being used for routers has yielded only four approvals in three months, while Chinese-based market leader DJI remains banned. Team Trump could easily apply the same vexing approach to robotics, where internet- and software-dependent machines are often assembled through complex Asian supply chains. This frosty tech rivalry is in danger of getting even chillier.

Follow Sebastian Pellejero on LinkedIn.

CONTEXT NEWS

The U.S. Federal Communications Commission said on March 23 that it was banning the import of all ​new foreign-made wireless routers over security concerns.