Will China React to Latest US Huawei, ZTE Slapdown?

Ray Le Maistre
News Analysis
Ray Le Maistre, Editor-in-Chief
2/16/2018



The US market just got even tougher for Huawei and ZTE, the two major telecom vendors that have come under the US national security spotlight for the past five years or so, as their mobile devices have now been labelled a security risk. (See AT&T Warned to Cut Ties With Huawei – Report, Huawei, ZTE Face US Federal Ban and Huawei Still Knocking on US Door – but AT&T Deal Thwarted.)

Multiple reports, including this one from CNN, noted that FBI, CIA, National Security Agency (NSA) and DIA (Defense Intelligence Agency) all sowed seeds of doubt about whether Chinese smartphones can be used to spy on the US.

It's hard to imagine that this is going to end well for anyone…

With the news breaking just as China embarked on the mass internal migration that marks the annual Chinese New Year celebrations, any immediate response was unlikely.

But in the Chinese Year of the Dog, will US companies find that the latest accusations leveled at Huawei and ZTE result in a post-holiday bite at their heels? US tech companies with business in China -- Apple, which generates tens of billions of dollars in revenues each year in China, and Cisco spring to mind -- might be feeling rather nervous as they head into the long US Presidents' Day weekend.

So will there be any reprisals? And what kind of impact will these pronouncements have on the US smartphone sales of Huawei Technologies Co. Ltd and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763)? Those are two open questions. But here's another: Where is the evidence that the mobile devices from any companies are a security threat to the US?

That's the question that really needs to be answered if unwelcome trade conflicts are to be avoided.

— Ray Le Maistre, Editor-in-Chief, Light Reading

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