More scrutiny for Huawei, ZTE as security fears linger

PUBLISHED : Saturday, 23 June, 2012, 12:00am
UPDATED : Saturday, 23 June, 2012, 12:00am

Huawei Technologies and ZTE, China's biggest telecommunications equipment manufacturers, could face more scrutiny in the United States after the American lawmaker who is investigating the two companies all but accused them of being national security risks.

Congressman Mike Rogers, chairman of the US House of Representatives' Intelligence Committee, said on Thursday that Huawei and ZTE may be selling subsidised gear in the US and legislation could be proposed to deal with any related national security threat, Reuters reported.

Many believe that the two companies' equipment is subsidised 'so it can be multiple times cheaper than any local competitor', Rogers told a conference in the US hosted by Bloomberg Government, a subscription website.

He noted that the concern was whether any of their equipment or software was designed to steal information or 'establish the ability to do cyberattacks'.

His statements followed the intelligence committee members' recent meetings with senior executives of Huawei and ZTE in Hong Kong and the requests they made for further information and documents from the two companies.

William Plummer, the vice-president of external affairs at Huawei and its point man in Washington, said in response: 'Given that Huawei has publicly and repeatedly and in a detailed fashion debunked this type of misinformation with solid facts, it would be truly unfortunate if such unsubstantiated and unclearly motivated statements persist.'

A Huawei spokesman at the company's headquarters in Shenzhen told the South China Morning Post yesterday that the company 'has been engaged in fact-based interactions with staff and members of the committee' since the investigation started and that the company would 'continue to be open and transparent in this review'.

The spokesman added: 'We support universal and industry-wide solutions to effectively address cyber threats and vulnerabilities.'

The US legislative panel initiated its investigation last November to review the extent to which companies such as Huawei allegedly facilitate Chinese economic espionage and threaten critical infrastructure in the US.

The committee is also reviewing how focused the US government and its intelligence community are about probing that threat and developing measures to protect the country's telecommunications networks.

Huawei, the world's second-largest telecommunications equipment manufacturer after Sweden's Ericsson, had earlier asked the US government to conduct a sweeping investigation of the company to allay fears that it threatened national security. Then Huawei deputy chairman Ken Hu - now the acting chief executive - released an open letter in February last year that suggested such an investigation.

Rogers said he hoped to complete a report by late summer, in both classified and unclassified form, on any threat to US national security that the Chinese companies' products may pose, according to Reuters.

Huawei's US revenue reached US$1.3 billion last year, up from US$765 million in 2010. Most of that came from sales of 3G smartphones and regular 2G handsets to network operators.

Lingering security concerns have hurt Huawei's efforts over the past 10 years to significantly expand its network infrastructure business in the US, the world's largest telecommunications equipment market.