ZTE to invest $30M more in U.S., plans high-end smartphone for CES

ZTE, stung by accusations that its network gear poses a threat to U.S. national security, said it will invest $30 million more in the United States to demonstrate its commitment to the market. The Chinese vendor also hinted it will unveil a high-end smartphone at the Consumer Electronics Show in Las Vegas next month.

ZTE said this investment will differ from past investments in the procurement of technology products because it will use the money "to work with a number of local partners to tap into both core and innovative technologies in the telecommunications industry." The vendor said it will use the funds to improve and integrate existing technologies, strengthen lab capabilities and build up the company's local capabilities to work closely with operators. The company noted that the investment will help spur job creation. 

The investment comes at a tough time for ZTE in the U.S. market. In October a report from the House Permanent Select Committee on Intelligence recommended that the United States block acquisitions and mergers involving Huawei and ZTE, and it also recommended that the U.S. government and U.S. companies avoid using equipment from the two Chinese companies. Huawei and ZTE pushed back aggressively against the report's conclusions, and have repeatedly said they do not pose a security threat and have no ties to the Chinese military or government.

"ZTE is committed to the U.S. market and we look forward to continuing our investment and leveraging local talent to bring new innovations to consumers," Lixin Cheng, CEO of ZTE USA, said in a statement.

ZTE has established five R&D centers and one logistics center in the United States, and the company employs around 300 people across the country, with 80 percent of them being U.S. citizens.

Meanwhile, ZTE indicated it will use the CES trade show next month to showcase a new high-end smartphone. "It will kind of be a starting point of a new design era for ZTE," Hagen Fendler, ZTE's new global chief design director, told the IDG News Service.

Although ZTE didn't offer many details, Fendler said that the smartphone will be separate from the "Nubia" brand, which ZTE teased back in late October. "The Nubia brand is a second brand, which we use to address the high end in parallel to this activity," he said.

While ZTE has had little success cracking the U.S. network infrastructure market, the company was the fourth largest handset company in the world in the third quarter, according to research firm Strategy Analytics (IDC found ZTE as the No. 5 player). 

According to IDC, ZTE shipped 7.5 million smartphones in the third quarter, up from 4.1 million in the year-ago period, and its global smartphone market share grew to 4.2 percent, up from 3.3 percent. ZTE captured market share at the expense HTC and Research In Motion (NASDAQ:RIMM), which each lost share in the quarter.

For more:
- see this release
- see this IDG News Service article

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