Huawei Posts Record Profits, Shakes Off News of NSA Spying

 
 
By Michelle Maisto  |  Posted 2014-03-31
 
 
 

Huawei Acting CEO Eric Xu seemed to discount a news report that the National Security Agency (NSA) hacked into servers at the telecom equipment provider's headquarters in Shenzhen, China.

"If The New York Times report is true, I think we will have known about this long ago," Xu said during a press briefing following the company's quarterly earnings announcement March 31.

The New York Times reported March 22 that the NSA had "pried its way into the servers in Huawei's sealed headquarters," according to documents provided by former NSA contractor and whistleblower Edward Snowden.

The NSA, said the report, "obtained information about the workings of the giant routers and complex digital switches that Huawei boasts connect a third of the world's population, and monitored communications of the company's top executives."

A goal of the mission, code-named Shotgiant, was to find links between the company and the People's Liberation Army, but also to "exploit Huawei's technology" so that when it was purchased for use in other countries, the NSA could "roam through their computer and telephone networks to conduct surveillance and, if ordered by the president, offensive cyberoperations," said the report.

Xu, during the press briefing, said it was "business as usual" at Huawei and that, after the report, the company "maintained calm," Reuters reported.

"Nobody has ever said that Huawei has the capacity to spy on the U.S. network and things like that," Xu continued. "For a business organization, no one would be so unwise as to do such a thing."

In 2012, the U.S. House Intelligence Committee released a report cautioning U.S. companies responsible for critical infrastructure such as shipping channels, financial systems, and natural gas, oil and water against purchasing from Huawei and ZTE, another Chinese telecom provider and mobile phone maker.

In the report, committee member Mike Rogers (R-Mich.) expressed concerns about Huawei and ZTE's ties to the Chinese government, a known "perpetrator of cyber-espionage."

"Any bug, beacon or backdoor put into our critical systems could allow for a catastrophic and devastating domino effect of failure throughout our networks," said Rogers.

In July 2013, Gen. Michael Hayden, a former director of the NSA, told the Australian Financial Review that "as an intelligence professional," he stood back "in awe at the breadth, depth, sophistication and persistence of the Chinese espionage campaign against the West."

Hayden admitted that the U.S. does "steal other countries' secrets," but that it does so to keep its citizens free and safe. China, by contrast, spies to makes its "citizens rich."

Despite cautions from the United States, Huawei posted record sales and its highest profit in three years, at $3.38 billion. Behind the momentum was its enterprise business, which grew 32 percent over 12 months. Sixty-five percent of Huawei's income came from outside China. 

"Our significant global presence has helped us achieve stable and continuous growth in the carrier network, enterprise and consumer businesses," said Xu.

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