Huawei makes a stand with $6 billion worth of U.S. supply orders

It has so far failed to snag any major U.S. wireless infrastructure deals, but Huawei is nonetheless making a big showing on these shores by promising to procure $6 billion worth of microchips and related technologies from U.S. manufacturers.

The three California chipmakers benefiting from Huawei's $6 billion largesse are San Diego-based Qualcomm (NASDAQ:QCOM), Irvine-based Broadcom and San Jose-based Avago Technologies. All are existing Huawei suppliers.

The purchased goods are targeted for Huawei mobile networks and handsets. Cristiano Amon, senior vice president at Qualcomm, commented that his company is "pleased to be working with Huawei, supplying our leading family of Snapdragon processors and multimode broadband modem products."

Playing the political "buy America" card, Huawei noted that the three-year OEM contracts "will directly and indirectly create over tens of thousands of job opportunities for U.S. business while contributing to growth and development opportunities for California high-tech as well as the ICT industry as a whole."

Along that same line, Huawei noted that since setting up its U.S. operations in 2001 - its U.S. headquarters is in Plano, Texas - Huawei has partnered with 280 U.S. technology providers, with total procurement contracts exceeding $30 billion. "These contracts have covered software, components, chipsets, and services, and its 2011 procurement in this critical region saw an 8 percent increase year over year," Huawei said.

Huawei is the world's second-biggest maker of telecom-network equipment, but it has been thwarted in efforts to sell network infrastructure to Tier 1 U.S. mobile operators due to allegations that the company has ties to the Chinese military and the Chinese government helps Huawei undercut rivals on pricing. The company was founded by ex-Chinese army officer Ren Zhengfei. In the U.S. Congress, the House Permanent Select Committee on Intelligence has been probing whether the presence of Huawei and another Chinese company, ZTE, pose security threats to U.S. telecommunications infrastructure and might provide opportunities for Chinese government espionage.

Nonetheless, Huawei has made inroads with small U.S. operators and scored a significant win in Canada, where Telus and rival operator Bell Canada have an LTE network-sharing agreement and agreed to buy their LTE infrastructure from Huawei and Nokia Siemens Networks.

Huawei, which is ranked ninth worldwide in mobile-device sales, intends to release LTE devices in the U.S. later this year, including CDMA/LTE devices, which could make Sprint Nextel (NYSE:S) and Verizon Wireless (NYSE:VZ) potential targets.

Huawei's inexpensive 3G smartphones have been a hit in the United States, helping drive smartphone adoption among lower-income consumers who sign up for service with operators such as Leap Wireless (NASDAQ:LEAP) and MetroPCS (NASDAQ:PCS). The vendor has stated it aims to become one of the top three handset brands by 2015.

For more:
- see this Huawei release
- see this Los Angeles Times article
- see this Telecom Lead article

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