Huawei Exec: Networking Giant No Longer Interested in U.S. Market

U.S. concerns about Huawei’s relationship with the Chinese government have made it too difficult to sell networking gear in this country, officials say.

Huawei Technologies, apparently worn down by allegations from U.S. lawmakers that the Chinese tech vendor represents a security threat to companies and individuals, is abandoning attempts to grow its presence in the U.S. market.

Executives with Huawei, a key competitor to Cisco Systems, said during an analyst conference April 23 that the company will now focus its telecommunications and networking efforts in other parts of the world. Responding to a question about congressional leaders' view of Huawei and fellow Chinese tech vendor ZTE, Eric Xu, Huawei executive vice president and one of Huawei's rotating CEOs, shot back that the company is dropping its efforts in the United States.

"We are not interested in the U.S. market anymore," Xu said, according to Reuters. "Generally speaking, it's not a market that we pay much attention to."

U.S. lawmakers have voiced concerns over the past couple of years about the close ties between the Chinese government and Huawei and ZTE, and that the vendors' telecommunications equipment could be leveraged by the Chinese government to spy on the U.S. government, businesses or people. U.S. officials have been vocal about the number of cyber-attacks in recent years that the Chinese government is rumored to have been behind, even if no direct ties have been found.

A report by the U.S. House Intelligence Committee in October 2012 reiterated those concerns and cautioned U.S. telecommunications companies about doing business with Huawei and ZTE. In addition, in March it was reported that as a condition of approving the deal between Softbank and Sprint, the two companies needed to meet national security standards, including not using Huawei equipment. Sprint doesn't use Huawei technology in its own networks, but has agreed to replace Huawei technology in its Clearwire subsidiary.

Officials with Huawei and ZTE, as well as the Chinese government, fired back at the report, calling the accusations untrue.

Analysts with IHS iSuppli last year said that the U.S. government's indirect warnings about Huawei and ZTE have convinced many U.S. firms to stay away from those companies' products, making it difficult for the vendors to gain a foothold in the United States.

Given that, focusing on other regions makes sense, according to Bill Plummer, vice president of external affairs at Huawei.

"Long story short, the comment that was made reflects the realities of our carrier network business in the U.S," Plummer said in a statement to journalists. "The growth of our carrier network business is primarily from developed markets in other parts of the world. Considering the situation we currently face in the U.S., it would be very difficult for the U.S. market to become a primary revenue source or a key growth area for our carrier network business. Nevertheless, our U.S. employees remain committed to providing quality services for our customers."

This comes after Huawei has spent millions of dollars building up its facilities in California and Texas, as well as its lobbying efforts in Washington, D.C.

Huawei executives also said they expect networking equipment sales to reach $10 billion by 2017, lower than the $15 billion they had projected last year.

The United States is not the only country with concerns about Huawei. Australia and India also have shied away from using Huawei networking technology.

Cisco CEO John Chambers last year said Huawei was a more formidable competitor than either Hewlett-Packard or Juniper Networks, but one that doesn't "always play by the rules."

Huawei also is looking to expand its smartphone business in the United States. Xu did not respond to questions regarding that business' status, according to Reuters.