The argument goes that Huawei would not be able to "create better equipment" had they been unable to wrongfully copy others' work in the first place. If the allegations are true, Huawei enjoys a position that resulted from unlawful and immoral behavior, and their ill-gotten gains should be confiscated from them.

Who knows what would have happened had Huawei done all their own R&D in the first place. Maybe they'd be in the same place as they are today; maybe not. But when you start from a position of copying someone else's work, the presumption is that everything you added since is tainted, and any profits should be someone else's, not yours.