Huawei and ZTE's 5G Expansion in Vietnam: Navigating Geopolitical Risks and Opportunities in Emerging Markets

The U.S.-China trade war has become a defining force in global technology infrastructure, with 5G networks at the epicenter of this rivalry. In Vietnam, a country strategically positioned between U.S. and Chinese geopolitical interests, Huawei and ZTE have capitalized on shifting dynamics to dominate 5G infrastructure deployment. As U.S. tariffs on Chinese goods and diplomatic pressures mount, Vietnam's embrace of Chinese technology underscores a broader trend in Southeast Asia: the recalibration of tech sovereignty and supply chains in favor of cost-effective, high-capacity solutions. For investors, this presents a paradox-high-growth opportunities in emerging markets, but with acute geopolitical risks tied to U.S. sanctions, data security concerns, and the long-term implications of China's technological hegemony.

The Vietnam 5G Boom: A Strategic Battleground

Vietnam's 5G infrastructure market is projected to grow from $822 million in 2024 to $2.1 billion by 2030, driven by government-mandated digital transformation and a population of 100 million increasingly reliant on mobile connectivity. Huawei and ZTE have secured pivotal roles in this expansion. A Huawei-led consortium won a $23 million 5G equipment contract in April 2025, while ZTE secured over $20 million in antenna deals, both occurring amid U.S. tariffs on Chinese goods and a diplomatic thaw between Vietnam and China. These contracts align with Vietnam's ambitious IC Infrastructure Plan, which aims for 100% fiber optic connectivity by 2025 and 99% 5G coverage by 2030.

Vietnam's telecom operators-Viettel, VNPT, and MobiFone-have accelerated 5G deployment, with over 11,000 base stations now covering 26% of the population. Viettel, in particular, has partnered with Huawei for technology transfers, signaling a strategic alignment with Chinese firms to fast-track infrastructure development. This collaboration is emblematic of a broader trend: Southeast Asian nations prioritizing economic pragmatism over geopolitical alignment, leveraging Chinese firms' competitive pricing and technical expertise to bridge infrastructure gaps.

Geopolitical Risks: U.S. Pressure and Data Security Concerns

The U.S. has long sought to exclude Huawei and ZTE from critical infrastructure in allied nations, citing cybersecurity risks and fears of Chinese state influence. Recent tariffs on Vietnamese goods and diplomatic warnings have not deterred Hanoi from deepening ties with Beijing. Instead, Vietnam's approach reflects a calculated balancing act: leveraging Chinese technology for economic growth while hedging against U.S. pressure through multilateral partnerships like the EU-Vietnam Free Trade Agreement.

However, this strategy carries risks. Western officials have raised alarms about the integration of Chinese 5G equipment into Vietnam's networks, particularly as the U.S. pushes for a "Rip and Replace" program to remove Huawei and ZTE components from global infrastructure. For investors, the asymmetry in this dynamic is clear: Chinese firms benefit from lower costs and rapid deployment, while host nations face potential scrutiny from U.S. allies and the risk of data sovereignty erosion.

Asymmetric Advantages for Chinese Firms

Huawei and ZTE's dominance in Vietnam is underpinned by three key advantages:
1. Cost Efficiency: Chinese 5G equipment is 30-50% cheaper than alternatives from Nokia or Ericsson, a critical factor for cash-strapped emerging markets.
2. Tech Transfer Partnerships: Collaborations like Viettel-Huawei enable local operators to build in-house expertise, accelerating deployment timelines.
3. Geopolitical Leverage: As U.S. tech exports face restrictions, China's "Bamboo Diplomacy" offers infrastructure investments aligned with national development agendas, such as Vietnam's digitalization goals. This trend is also evident in the Gulf Cooperation Council (GCC), where Huawei and Alibaba are central to UAE and Saudi Arabia's 5G and cloud initiatives. For investors, this signals a broader shift: Chinese firms are not just suppliers but strategic partners in reshaping global tech ecosystems.

Long-Term Implications for 5G Investments

The U.S.-China 5G rivalry will redefine infrastructure investment strategies in emerging markets. By 2030, global 5G spending is projected to reach $1.3 trillion, with China leading in capital outlays. For Vietnam, this means sustained growth in 5G-related sectors, including smart cities, industrial automation, and AI-driven services. However, reliance on Chinese technology could create vulnerabilities, particularly if U.S. sanctions escalate or data localization laws clash with Chinese firms' operational models.

Investors must also consider the rise of "tech sovereignty" initiatives. Europe's push to phase out Huawei and the U.S. emphasis on domestic 5G development highlight a growing preference for diversified supply chains. This could create opportunities for alternative vendors in the medium term but may also fragment the 5G market, complicating long-term asset management.

Strategic Entry Points for Investors

Despite risks, Vietnam's 5G market offers compelling opportunities for investors willing to navigate geopolitical complexities. Key entry points include:
1. Blended Finance Models: Combining concessional and commercial funds to de-risk infrastructure projects, particularly in data centers and clean energy. This model is gaining traction in emerging markets.
2. Private 5G Networks: Enterprises in logistics and manufacturing are investing in private 5G networks, with spending projected to hit $10 billion annually by 2025.
3. Green Bonds and Sustainable Instruments: Over 50% of private infrastructure investment in 2024 was classified as "green," driven by demand for measurable impact.

For investors, partnerships with Chinese firms in hardware and AI applications could mitigate supply chain risks while leveraging their cost advantages. However, diversification-such as hedging with European or U.S. vendors for non-core infrastructure-is essential to balance growth and security.

Conclusion

Vietnam's 5G expansion, spearheaded by Huawei and ZTE, exemplifies the intersection of technological innovation and geopolitical strategy. While U.S. tariffs and data security concerns pose risks, the market's rapid growth and strategic partnerships create a fertile ground for investors. The key lies in adopting a nuanced approach: leveraging Chinese firms' cost and technical advantages while hedging against geopolitical volatility through diversified supply chains and sustainable financing. In an era where 5G is the backbone of digital economies, Vietnam's trajectory offers both a cautionary tale and a blueprint for navigating the new frontier of tech-driven globalization.