ZTE bullish on U.S. smartphones, spurned on infrastructure

ZTE expects its terminal shipments--which include handsets, tablets and data cards--to jump 40 percent this year as it continues its march into Western markets. The Chinese handset and equipment vendor also intends to launch smartphones and tablets with U.S. carriers in the second half of the year--but has been stymied in its bid to crack the U.S infrastructure market.

"The U.S. market is important to us because one-fourth of the global telecom market's revenue comes from the U.S.," Cheng Lixin, CEO of ZTE USA, told Dow Jones Newswires in an interview. "We are committed to the U.S. market, but we want to be treated fairly by the U.S. government."

Cheng said ZTE aims to double its terminal shipments in the U.S. this year, and will launch 3G and 4G smartphones and tablets with Tier 1 operators later this year, but he declined to give specifics. ZTE has focused on Google's (NASDAQ:GOOG) Android platform in its smartphones and tablets, and at the Consumer Electronics Show last week the vendor demonstrated a new Android LTE tablet, the Light LTE.

ZTE has been steadily building its relationships with all of the Tier 1 U.S. carriers, but has yet to launch any smartphones in the U.S. market.

The company still feels it is being shut out of the U.S. infrastructure market for political reasons. Sprint Nextel (NYSE:S) selected Alcatel-Lucent (NASDAQ:ALU), Ericsson (NASDAQ:ERIC) and Samsung for its network modernization project in December after reports emerged that Commerce Secretary Gary Locke called Sprint CEO Dan Hesse to discuss the government's concerns about awarding the contract to a Chinese firm. Both ZTE and its larger Chinese rival Huawei were among the vendors bidding for Sprint's contract.

"We were excluded from the bidding (for Sprint's network upgrade contract) even though the carrier gave high scores to our equipments. We felt disappointed with the unfair treatment," Cheng said. "We will continue to communicate with the U.S. government to make them understand ZTE is a transparent public company."

Steve Elfman, Sprint's president of network operations and wholesale, told FierceWireless in December after the carrier announced its vendor selections that both Huawei and ZTE were involved in the RFP for the project. However, he said factors beyond security concerns contributed to Sprint's ultimate decision. "It's clear that we were concerned about the security and we certainly looked into it," he said. "But that wasn't the factor that made us go elsewhere."

For more:
- see this Dow Jones Newswires article (sub. req.)

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