Posted 10/08/2012 at 11:45 AM
Posted 5 years ago
China’s two leading technology firms pose a threat to US national security, and American businesses should avoid doing business with them, according to a House Intelligence committee report.
In an article by BBC Business news, the report that is to be released later today suggests that, both Huawei and ZTE had failed to allay fears of their association with the Chinese government and military.
“China has the means, opportunity and motive to use telecommunications companies for malicious purposes,” says the report. “Based on available classified and unclassified information, Huawei and ZTE cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems.”
Of course, such allegations have been denied by the two companies, who each maintain they have cooperated fully with the investigation.
“ZTE should not be a focus of this investigation to the exclusion of the much larger Western vendors,” said China’s second largest technology firm in a letter to the committee, reported by Reuters.
Huawei has also had their say on the matter in The Wall Street Journal, with company spokesman William Plummer saying:
“Purporting that Huawei is somehow uniquely vulnerable to cyber-mischief ignores technical and commercial realities, recklessly threatens American jobs and innovation, does nothing to protect national security.”
Both Huawei and ZTE rank amongst the largest telecommunications companies in the world. Huawei is the world’s second largest manufacturer of routers behind Ericsson and ranks sixth in the global mobile phone market, two places behind ZTE.
According to Reuters, Huawei generates around 4 per cent of its group sales figures from the US, while ZTE’s revenues from the States make up around 2-3 per cent of the overall figure.
Thanks to their provision of well-priced Android phones, China’s top to smartphone providers have had decent success in the US market, and with handsets from both available with carriers such as Verizon, Sprint and T-Mobile, the western market has become very fruitful.
“The investigation concludes that the risks associated with Huawei’s and ZTE’s provision of equipment to US critical infrastructure could undermine core US national-security interests,” says the report, but it is not yet clear whether it is referring solely to telecoms equipment, or handsets. If smartphones are mentioned as part of the report, the fallout could well be disastrous to both companies, and to their ambitions in the US.