Building a secure phone: Is the Chinese government also going to join the smartphone war?

The Wall Street Journal published an article today saying that in order to escape the surveillance of U.S. intelligence agencies and ensure national security, China is working hard to independently produce safe smartphones, develop domestic components and operating systems, and has made considerable progress. The participating companies include both state-owned companies and private high-tech companies.

China is trying to produce its own secure smartphones that would shield it from surveillance by U.S. intelligence agencies.

Multi-party participation

Snowden, who revealed the US surveillance

The effort, which involves both state-owned enterprises and some Chinese tech companies with more experience in the tech industry, marks Beijing's latest step in building a national tech industry and moving away from American suppliers.

The Chinese government has long chafed at the dominance of U.S. companies in smartphone operating systems and processors, the most vulnerable components in phones. In China, the world’s largest smartphone market, nearly all phones are either Apple iPhones or run Google’s Android operating system.

After years of lagging behind in technology, China has been unable to do much about it. After being criticized for using an iPhone, China's first lady Peng Liyuan switched to a domestic smartphone, the ZTE Nubia Z5, although it still runs Android and has a Qualcomm processor.

Many Chinese technology companies have made progress in moving away from Western technology. In 2013, former NSA contractor Edward Snowden revealed that the NSA installed surveillance "backdoors" in some exported equipment. Influenced by this news, the Chinese government has strongly encouraged Chinese companies to develop independent technology and break away from dependence on Western technology.

ZTE is developing a secure smartphone for government agencies that uses a Chinese chip and runs a homegrown operating system, a spokesman said. Spreadtrum Communications, China's largest chip designer, said it will mass produce a range of chips running a domestic operating system by the end of the year.

Alibaba is already working with the Ministry of Public Security to develop a more secure mobile operating system for police.

Little impact on foreign manufacturers

All of these efforts are aimed at government agencies and state-owned enterprises and are unlikely to appeal to ordinary consumers. For example, the secure phone developed by ZTE does not have GPS, cameras, WiFi and Bluetooth to minimize security risks.

The trend is unlikely to have a big impact on the market share of U.S. mobile device component and software makers in China. James Yan, an analyst at market research firm IDC, estimates that sales of secure phones in China could reach about 2 million units next year, with a 3% market share. However, if more consumer phones use domestic operating systems and processors, it could pose a challenge to Android and Qualcomm.

Neither Qualcomm nor Google commented on this. Data from market research firm Strategy Analytics shows that Qualcomm's share of the smartphone processor market reached 52% last year. Data from market research firm IDC shows that in the second quarter of this year, Android's share of the global smartphone market was 82.8%.

Other US technology companies have already felt the chill in the Chinese market. IBM and Cisco have seen their sales in China decline as government departments and state-owned enterprises have increasingly turned to domestic manufacturers such as Inspur and Huawei for technology products.

Cisco does not disclose sales data by country, but has said that Snowden's revelations have affected the company's sales in China. IBM has attributed the decline in sales to China's economic slowdown. Both companies said they do not leave "backdoors" in their products.

Chinese banks have begun buying more domestically made smartphones, even though formal quotas were scrapped earlier this year amid pressure from the U.S. China required that 50% of new smartphones purchased by financial institutions meet “safe and controllable” standards, according to the scrapped rules, which were reviewed by The Wall Street Journal.

China’s efforts to build a domestically made secure phone also have economic benefits: Components that are critical to security are also the most profitable. But even with a domestically made processor, modem, and operating system, a Chinese secure phone is likely to contain enough foreign components that they have little impact on security.

A ZTE spokesman said it was impossible to produce smartphones using only domestic hardware and software, but the company would try to use domestic components to meet the needs of government departments.

Other manufacturers also want a piece of the pie

Other Chinese phone makers, including Coolpad and Qihoo 360, are also eager to grab a piece of the market, touting security features such as data encryption on their new models this year. "Security is a hot area right now," said Chris DeAngelis, general manager of Alliance Development Group, a consultancy in China. "The government wants to minimize the use of foreign technology and prevent all kinds of backdoors."

Spreadtrum Communications CEO Li Liyou said the company will start selling special chips this year that allow mobile phone users to switch between Android and an encrypted operating system developed by Yuanxin Technology. "Users' voices and data are encrypted, and it is very secure."

However, just because a phone uses domestic components doesn't mean it's safe, said Bryce Boland, chief technology officer for Asia at cybersecurity firm FireEye. Hackers can still steal data directly from mobile operators. New operating systems may also have more security flaws.

China is not alone in seeking high-security smartphones for its government agencies. The National Security Agency developed a Chinese version of the phone in 2009, but this year it switched to Samsung smartphones with custom security software. Debora Plunkett, the NSA's director of information security, said in 2012 that the phone developed by the NSA was "behind the technology of the time."

Lao Yao, secretary general of the China Mobile Alliance, said that some Western governments have cooperated with BlackBerry to customize highly secure mobile phones for government departments, but the Chinese government and Western companies do not trust each other enough and will not take similar measures. "China has no choice but to develop its own operating system to ensure security." (Compiled by Shuang Ye)

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.