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Huawei, ZTE Charm Offensive Just Got Harder

Iain Morris

Hiding in plain sight?
Yet the nature of the alleged cyberattack through Supermicro could also make Huawei and ZTE seem an unlikely conduit for Chinese government surveillance. Long before Bloomberg's report surfaced, critics of the US stance had argued that China's government would have to be stupid to run a spying operation through well-known Chinese manufacturers of network equipment. In January 2016, a Huawei executive told Light Reading founder Stephen Saunders: "If the Chinese government wanted to spy on the US, [Huawei's] equipment is literally the last place they would do it because that's the first place everyone is going to look." (See Curing America's China Syndrome .)

Security experts who spoke with Saunders at the time of that report also pointed out that a more probable scenario was China's installation of "backdoors" into silicon made in China but sold by US equipment makers. This is exactly the scenario that Bloomberg claims to have uncovered in its recent investigative report.

What's more, even though it has been under constant public scrutiny, Huawei has never been found guilty of any cybersecurity infraction in its 30-year history. A Huawei insider describes the single reference to Huawei in the Bloomberg report as "fairly gratuitous," but says the story does not make any link between Huawei and Supermicro. (Bloomberg's authors write: "US officials had been warning for years that hardware made by two Chinese telecommunications giants, Huawei and ZTE, was subject to Chinese government manipulation.") Huawei preferred not to provide a comment on the Bloomberg report for the purposes of this story.

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In the meantime, companies implicated in the alleged security breach, including Amazon and Apple, have strenuously denied they had any knowledge of that breach or the subsequent US government investigation, casting aspersions on Bloomberg's report. Its appearance as President Donald Trump's administration ramps up the anti-China rhetoric has provoked skepticism about its origins. Bloomberg, however, cites no fewer than 17 sources, with some at a senior level, in its story. It included the denials from Amazon and Apple in the report and has vigorously defended it since publication.

Regardless of the discussion about security, Huawei and ZTE continue to anger their opponents. US hardliners have long accused the Chinese of ripping off intellectual property and playing unfairly when it comes to international trade. Pursuing its philosophy of state capitalism, the Chinese government is believed to have an influence over any Chinese company of note. To the hardliners, Huawei and ZTE are pariahs simply because of their status as large Chinese firms with a major overseas presence. The Bloomberg report is merely another reason to lock them out. (See Huawei Boss Slams 'Ignorant' Rubio on Research Restrictions.)

Despite these arguments, Huawei maintains relationships with most of Europe's big telcos, and the number of governments that have restricted its activities remains tiny. Even India has now invited Huawei and ZTE to participate in 5G trials, according to the latest reports, after it was previously said to have blocked their involvement. Only Australia and the US have effectively banned the companies from doing business. (See India Joins US & Australia to Give Huawei, ZTE 5G Cold Shoulder – Reports.)

Bloomberg's report seems bound to hinder their efforts to lift restrictions in the US market. Unfortunately, for the Chinese vendors, it appears to illustrate the sophistication of Chinese espionage through ICT channels. Even if one accepts that Chinese authorities would be foolish to use Huawei and ZTE for a cyberattack, or to spy on foreign governments, skeptics reading about Supermicro are unlikely to regard the Chinese firms with a friendlier eye. For Huawei and ZTE, the task of winning over the critics may just have got much harder.

— Iain Morris, International Editor, Light Reading

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