According to market research firm IHS iSuppli, U.S. telecom operators were already wary of buying equipment from Huawei and ZTE because of the investigation and other scrutiny by the U.S. government. Despite their global sales growth, neither has been able to crack the U.S. market despite a decade of effort, IHS said.
"The U.S. government has blocked numerous contracts and acquisition deals between American companies and Chinese equipment makers, usually in an indirect manner," said Lee Ratliff, principal analyst for broadband & digital home research at IHS, in a statement.
Ratliff added that the committee's report could further hamper the ability of Huawei and ZTE to penetrate the U.S. market in the future.
Jagdish Rebello, director for consumer and communications at IHS, said the concern among U.S. lawmakers mostly centers on the transition to 4G wireless networks, which will bring an exponential increase in complexity.
"Because of this, many carriers are now contracting with networking OEMs to not only supply the equipment but also to partner with carriers to build the networks," Rebello said. "This makes the networking equipment makers, such as Huawei and ZTE, a critical part of the infrastructure deployments."
According to IHS, became the world’s largest supplier, of wireless communications infrastructure equipment during the first nine months of 2011, with sales of $8.9 billion and market share of 29 percent. ZTE ranked fifth in the world over the same period, with revenue of $2 billion and market share of 6 percent, IHS said.
Huawei is regarded as a price and technology leader, according to IHS. The company has won contracts with many European carriers for 4G deployment and network management and with many carriers in the emerging markets for 3G deployment, IHS said.
The U.S. Department of Defense previously highlighted Huawei’s links to the Chinese government in a 2008 report to Congress. Huawei’s efforts to buy its way into the U.S. market through acquisitions of 3COM and 2Wire were scuttled due to concerns of a U.S. government veto, according to IHS.
IHS said Huawei and ZTE reported in 2010 that the Indian government started blocking purchase orders placed with them based on similar security concerns.
"According to the report, both Huawei and ZTE failed to provide sufficient evidence to alleviate the committee's concerns. ",
Interesting. Guilty until prove innocent. The principle used here is opposite to the court cases.
That's an interesting perspective. To some degree, I'd say it does seem as though these firms were accused of something and asked to prove their innocence. Being that these are politicians, there are likely some politics involved. I felt that the report was pretty strongly worded, which surprised me.
QUOTE: Interesting. Guilty until prove innocent. The principle used here is opposite to the court cases
That would be Napoleonic code ... the same principle that applies in North America (NA) when you get a parking/driving ticket. The opposite of the innocent until proven guilty scenario that applies in NA criminal courts.
For the record, here are a couple of excerpts from the Huawei statement about the report:
"The report conducted by the House Permanent Select Committee on Intelligence, which took 11 months to complete, failed to provide clear information or evidence to substantiate the legitimacy of the Committee's concerns."
"Despite our best effort, the Committee appears to have been committed to a predetermined outcome."
Whole statement can be found here:
The evidence has been collected for a while. Yes the report was politically motivated, but the threat is real. China is NOT our friend. I try to avoid using anything made in China, but it is next to impossible. Just be aware that many of their advanced devices are not necessarily benign.
Just my opinion.
Chinese should really be educated by your "China is NOT our friend". I believe the majority of Chinese are not aware of that. They are still in their dream of a peaceful world.
BTW, you want a friend, you get a friend. If you want an enemy, you will get an enemy.
I think that the threat to national security is an excuse. The real reason is the lack of confidence of competition. Huawei is very successful in Europe, such as UK's 21CN. No one has challenged Huawei's threat here. The answer is E///, ALU and NSN. To look at US, Cisco appears afraid of the march of Huawei and ZTE and all the semi's are kissing their arses to provide them the most advanced chips with peanuts price.
I would like to see the Americans stand up to face the competition to make something like iPhone rather than moan pathetically like the Congress.
I've actually worked for a company competing against Huawei and ZTE. The playing field is most definitely not level. The amount of Chinese government backed loans spurting into these companies has nothing to do with fair competition.
As far as crooked business practices go it is well known in the industry that this has happened. To a certain extent it was just that these were normal business practices in China and they were surprised that it wasn't in the west.
Finally China's internal markets are MUCH more protected than the west's. Until they open up, create a legal system that doesn't do their government's will and float their currency I'd be happy to see more of this.
And no I don't think the Chinese people are our enemies but I suspect members of their government are.
I must have supplied chips to you and I know how you guys work. I have no idea how the Chinese government is involved with the Huawei & ZTE business, but I have seen the revenue from you guys are declining year on year.
I see more of you guys mistakes have helped Huawei and ZTE rather than they have done better.
If you look into Marconi's performance when BT started thire 21CN, you may understand more.
Not allowing Huawei & ZTE to get into US market, the only thing we can have is to use expensive equipments which isn't any better.
If they wanted to, Huawei and ZTE probably could incorporate capabilities into their telecom gear that could be used for surveillance, although the House Intelligence Committee provided little or no evidence that they have done so. When asked about evidence of spying, committee members said Huawei and ZTE officials wouldn't answer their direct questions on the matter. That said, another large enterprise exists that is fully capable of sweeping up nearly all the world's communications whether or not it is encrypted. The name of this organization is, of course, the National Security Agency. NSA insiders like William Binney, who worked on top-secret surveillance programs during the Cold War, have revealed that NSA has been using the surveillance technologies originally designed for foreign gathering to spy on Americans. Why isn't the House Intelligence Committee investigating this?
On the other hand, The Chinese manufacturer or even government could sell "unauthorized" access to the equipment to the US government. This could be especially useful if the real enemies of the US - countries where US flag burning is routine in street demonstrations - also purchase telecom equipment from these companies.
Is there politicking and to some extent protectionism involved? No doubt, but there is still a very valid concern here.
Given the direct er, influence, the Chinese gov has over any supplier on the mainland I agree with the report. Until those companies provide proof of innocence - as in trusted 3rd party verification of code used in their equipment - then it is far far better to err on the side of security.
That said, I would think that the same applies to Chinese suspicions on equipment (and software) they import. There is good reason and it's not just 'business' that the Chinese gov has pushed and supported their home-grown telco and computer biz. Along those lines they (and Russia) are also the largest users of Linux simply because they *know* what is in the code.
Who's to say that US companies aren't doing the same thing: Leaving backdoors, etc for exploits such as Stuxnet and Flame. Or for that matter, what about PC's in general ? There's no practical way to reverse-engineer the multitude of custom SoC's that could easily have eavesdropping hardware built-in.
And then there's software...it's a given that M-Soft products have more security holes than a block of Swiss cheese.
The only way to keep your data safe is to leave your brand new computer in the box and never turn it on. Nothing is secure anymore.
Starting in the early 1970's, the military systems people started using commercial components rather than the old custom military parts. I remember our military products people used to get custom IC's made at Motorola, and sadly we had to shut down other parts, and move all non-US citizens out of factory, then they brought in their wafers and masks, we ran a few operations, they took their stuff (including any broken pieces of wafers) out, and we never knew what they were for.
In 1968 Nasa started to set up its own pilot fab (for beam-lead CMOS !) in Alabama...we wrote a plan for them. Not sure how many other secure fabs were set up. But that could not keep up with cost-benefit of commercial chips.
Iridium phones and Motorola sat pagers were first good communication gear that the Chinese Army got to talk back to their leaders from remote regions. That may have prevented some border wars due to confusion. But they had to think that we were also listening.
The web and consumer electronics changed everything. Everything is open now. Perhaps that is safer? No secrets? Well...NOT if you are using the web to control the electrical grid, for example, or power plants. Options?
"Both companies are suspected of having ties to the Chinese government, military and China's ruling communist party."
Well, duh! Of course they do. You don't where they are in China *without* such ties.
"The firms have been accused of designing communications equipment to allow unauthorized access by the Chinese government, a charge that has stoked fears over national security and the potential for corporate espionage."
I'm trying to imagine gear produced over there and bought here where the ability for the Chinese government to listen in would be hidden carefully enough that US engineers *wouldn't* find it. (For that matter, I'm having trouble imagining and purchases where such security might be an issue where US engineers wouldn't *look* for such back doors, given the guarded nature of the relationship between China and the West.)
I don't really see a security risk, only evidence that Congress doesn't have a technical clue, but we hardly needed more evidence to prove that point.
Poor logic -- Your lack of imagination, doesn't mean it doesn't exist.
The Chinese have a military objective and the commercial side is just a facade. All of China's neighbors know how expansionist she is. Be very careful. The Chinese have 100 year plans. Incremental advances in her military industrial complex will compound into a formidable enemy one day. Next to N.Korea, Iran and few other banana republics, she is the biggest repressor of freedom and democracy in the world.
I'm praying for the Chinese people to live free and peacefully one day with the rest of humanity.
let me quote a comment posted long time ago
"with the military power much larger than all the other countries in the world combined, a country deep in debt like Greece if not worse, a country with 50million people on food stamp, with huge cut on public education/services... but still spend 25% of its budget on military (in the mean while, with no plan on how to pay off its debt)"
who is the threat to world peace?
Back to the original topic, in a thief's eye, everyone has the intention to be a thief
Huawei and ZTE got to where they are by hiring exLucent and Nortel employees. The non-Chinese were fired after a couple of years after their brain dump, the Chinese (Communist party members who came over as 'students' and infiltrated american companies), are retained to help the main land Chinese master the technology. Soon they will be reintroduced to other American companies where the Chinese lack technology. Long time moles are entering defense companies now. This is Chinese military intelligence strategy.
yes, they should hire from Walmart, target...
File a lawsuit if you are fired without a good reason. Don't just complain without any action. Isn't that what losers do?
wait, is that your imagination or reality, you look like full of imagination. we have to be careful of what you said...
Huawei's problems have been going on for nearly 10 years.
There can be other motivations, but from engineering viewpoints, many are fairly clear to see.
They do because they can. To think otherwise is naive. The Chinese government ordered 38,000 students from public schools in the area to work at Foxcom when they couldn't recruit enough workers. The students couldn't refuse. That alone should tell you how far they will go to achieve their goals.