Report: Huawei CEO says company has exited U.S. network gear market

Huawei founder and CEO Ren Zhengfei said the company had decided to exit the U.S. network equipment market, according to media reports, because of continuing disputes between the U.S. and China and lingering concerns, which the company has called unfounded, that Huawei itself poses a security threat to the United States.

Huawei Ren Zhengfei


In a rare media interview with French journalists on Nov. 25, Ren said that Huawei is "a private enterprise without any high-level political position," and that there are much bigger issues at play in U.S.-Chinese relations than the status of the company itself.

"If Huawei is an obstacle to bilateral trade, then it's really not worth it," Ren said, according to a translated version of the Chinese interview transcript by NetEase and posted by ZDNet. "That's why we had decided to exit the U.S. market, so as not to be caught in the middle. Since then we've still been doing very well." Foreign Policy also had an extremely similar translation.

"Anyway, our phones are selling very well in the U.S., they can't say our phones also have security problems right? That's because the software is American, and not ours," he said, in apparent reference to Google's (NASDAQ:GOOG) Android, which powers most of Huawei's smartphones. "We do not have an operating system. We do things reasonably."

Both Huawei and ZTE were stung last year by a U.S. government report that said they pose a security risk because their equipment could be used for espionage--a claim Huawei and ZTE vigorously and repeatedly disputed.

Neither Huawei nor ZTE has won a major network equipment contract in the U.S. market, ceding it to Alcatel-Lucent (NYSE:ALU), Ericsson (NASDAQ:ERIC), Nokia Solutions and Networks and Samsung. However, both Huawei and ZTE have relatively strong handset businesses in the U.S.

William Plummer, Huawei's vice president of external affairs, told Foreign Policy, "It is true that Huawei has adjusted our priority focus to markets that welcome competition and investment, like Europe," adding that Ren is "making a comment on the current market environment."

Additionally, a Huawei represenative said: "We remain committed to our customers, employees, investments and operations and more than $1 billion in sales in the U.S., and we stand ready to deliver additional competition and innovative solutions as desired by customers and allowed by authorities."

A senior Huawei executive in October said it may take a decade to clear up the national security and cybersecurity concerns lawmakers have with the Chinese vendor because the company is held to a "higher bar." John Suffolk, the company's global cybersecurity officer, told Bloomberg: "America has genuine concerns, and it's Huawei's responsibility to satisfy those genuine concerns. We will continue to work with our American colleagues to satisfy their needs and concerns and we believe we can do that."

Despite being effectively shut out of the U.S. network gear market, Huawei has still managed to flourish in other markets, including those outside of its native China, such as Europe, Africa and the Middle East. Indeed, according to ABI Research, for the third quarter of 2013 Huawei took the No. 1 rank in global RAN market share at 28.1 percent, up 3.8 percent from the year-ago quarter. Ericsson was No. 2 with 21.8 percent.

For more:
- see this Les Echos article (translated via Google Translate)
- see this Foreign Policy article
- see this ZDNet article
- see this CNET article
- see this ABI release

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