Special Coverage Series

Network Computing

Special Coverage Series


Huawei Backs Out Of US Switch Market

Chinese switch maker Huawei calls it quits in the US market, again, amid cyber espionage and conspiracy concerns.

When Huawei founder and co-CEO Ren Zhengfei granted an interview to French reporters at a research and development center opening in Paris last week, the press neglected to mention one rather interesting detail that came up: Huawei apparently intends to stop doing business in the United States. Zhengfei's words come amid a growing stockpile of accusations, conspiracy, and intrigue surrounding his company, almost none of it conclusive.

Although the French Press failed to remark on Huawei's US exit, the Chinese publication tech.163.com subsequently published the complete transcript of Zhengfei's press conference. Foreign Policy then translated the document into English, interpreting Zhengfei's statements to mean that Huawei has decided it's not worth pursuing the US market if that will hinder economic and foreign relations between the US and China.

A careful read of Google's translation of the transcript, corroborated in part by Foreign Policy, however, reveals somewhat less than a formal declaration of Huawei's exit from US markets. Indeed, the company has not issued a formal statement to this effect. What's more, Zhengfei did not explicitly state which specific technology markets such an exit would entail, if it comes at all.

This is not the first signal from Huawei of its growing disinterest with the US. In April, Executive Vice President Eric Xu made a similar statement at a gathering of financial analysts.

Chinese cybercrime fears

For years, US lawmakers have maintained that both Huawei and China-based competitor ZTE could potentially embed stealth espionage technology inside the gear they produce for the world's Internet routers, switches, and wireless transmitters. No explicit evidence of such a conspiracy has been uncovered, however, though the House Intelligence Committee has taken both companies to task for having failed to disprove it.

If his company should get caught in the middle of tensions between China and the US, stated Zhengfei in Paris, it's not worth it for Huawei to continue doing business with America. Some $10 billion in annual sales for his company, he said, represents a mere fraction of China's trillions in exports that are at stake, and with which the Chinese government is more importantly concerned. That figure may be somewhat inflated, as it would constitute 28% of its worldwide sales.

Tellingly, however, Zhengfei did add that the operating system for its Android smartphones is American-made, implying that any security problems posed should be considered an American problem.

If a US exit does actually come, it could embolden both lawmakers and competitive manufacturers worldwide to use the fear of global espionage as a successful marketing and campaigning tactic.

An October 2012 House Intelligence Committee report publicly rebuked Huawei and ZTE for failing to reveal the extent of their ties to the Chinese government, and declared both companies potential, if not current, threats to national security. It cited the lack of visibility into the amount of state control over Chinese private business as a major concern.

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