In a blow to Huawei and ZTE, a US government committee has warned that operators should not procure equipment from the Chinese vendors due to potential security risks.
The US House Intelligence Committee this week published its long-awaited report into the security implications of using Chinese telecom equipment in US network infrastructure. The report sites “allegations” of suspicious behavior by US companies using equipment from Huawei and ZTE, but doesn't include any concrete evidence in the published version.
While the report includes only recommendations that operators and public agencies avoid the vendors, it is likely to add to the difficulties Huawei and ZTE are already facing in winning business in the US market.
Huawei strongly dismissed the report for failing to provide any clear evidence to support the claims. “The report released by the Committee today employs many rumors and speculations to prove non-existent accusations,” a company statement reads.
Huawei bemoaned that, despite its best effort to co-operate in the inquiry “the Committee appears to have been committed to a predetermined outcome,” and accused panelists of paying “no attention to the large amount of facts that we have provided” to the enquiry.
“We have to suspect that the only purpose of such a report is to impede competition and obstruct Chinese ICT companies from entering the US market,” the vendor added.
Huawei is reportedly considering public listing a – possibly in the US – in order to become more transparent and ease the security suspicions of US and other potential customers.
IHS principal analyst Lee Ratliff said the committee's report was another blow to Huawei's and ZTE's efforts to penetrate the American market. But he added that the report may have little impact on the vendors' current sales figures.
“The US government has blocked numerous contracts and acquisition deals between American companies and Chinese equipment makers, usually in an indirect manner,” Ratliff said, adding. “Because of this intense government scrutiny and the very high risk that a deal will ultimately be nixed after wasting months of time and millions of dollars, many US companies are [already] hesitant to work with Huawei or ZTE.”
The report only formalizes the government's objections, he said.
Separately, Cisco Systems has ended its sales partnership with ZTE, over the allegations that the latter supplied the former's equipment to Iran, in breech of international trade sanctions.