China's Huawei setback in US market amid national security concerns

By AFP   January 10, 2018 | 05:36 pm PT
Huawei faces accusations over its intellectual property protection and ties to Chinese intelligence. 

Chinese tech giant Huawei faces a major setback in efforts to expand in the U.S. smartphone market following renewed national security concerns, documents showed.

Huawei, which appeared to lose a deal with AT&T that would have given it an improved foothold in the handset market, faced criticism from U.S. lawmakers over its intellectual property protection and its ties to Chinese intelligence, according to a letter seen by AFP this week.

The letter, signed by 18 members of the House and Senate intelligence panels, expressed concerns first voiced in 2013 by congressional investigators.

The document said that later information obtained by the committees "only reinforces our concerns regarding Huawei and Chinese espionage."

The letter dated December 20 was sent to the U.S. Federal Communications Commission with copies to the Justice Department, FBI, CIA and Department of Homeland Security.

It said the FCC "would benefit from Intelligence Community briefings on the threat Huawei and other Chinese technology companies pose."

Huawei has become the world's third largest smartphone maker -- but its U.S. presence has been limited by a lack of agreements with wireless carriers, which sell most devices.

The company's consumer business chief Richard Yu was a keynote speaker Monday at the Consumer Electronics Show, where an expected announcement with AT&T failed to happen.

Yu did not directly address concerns in the letter, but said it was "unfortunate" that Huawei would not be selling in the U.S. through carrier channels.

"It's a big loss for us and also for carriers," he said. "But the more big loss is for consumers."

In addition to the AT&T deal, a potential agreement with another major wireless carrier, Verizon, was also in jeopardy, according to media reports.

A Huawei spokesman said the company would not comment on rumors or speculation and did not respond to the letter, which was revealed earlier this week by U.S. media.

The company said it would release new products to U.S. consumers as unlocked devices through retail channels, reaching a smaller market.

"We have the strongest confidence in our products and will continue to innovate and break new ground," Huawei said in a written statement.

"At the same time, we believe that U.S. consumers deserve equal opportunity and the choice to enjoy the best technology and more smartphone options through more channels... At Huawei, privacy and security are always our first priority."

The statement added: "We are compliant with the world's most stringent privacy protection frameworks... We have gained the trust of over 150 million customers in the past year alone, and now sell our devices through more than 45 of the top 50 global carriers."

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