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Cisco Feels Security Heat in China

Ray Le Maistre
10/29/2012

Unconfirmed reports from China suggest that Cisco Systems Inc. (Nasdaq: CSCO) routers have been replaced in part of China Unicom Ltd. (NYSE: CHU)'s backbone network, with the operator citing security concerns as the reason for the move.

According to the Morning Whistle, the decision to replace Cisco gear in the China169 IP backbone in Jiangsu province was due to "product vulnerability and back door problems."

Any such decision would appear to be a reaction to a series of recent events involving Chinese equipment vendors Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763).

The duo were damned in a recent U.S. House Permanent Select Committee on Intelligence report, which concluded in early October that Huawei and ZTE "pose a security threat to the United States and to our systems." Both vendors refuted the report's findings. (See ZTE: Our Equipment Poses No Threat to US, Huawei Responds to U.S. Investigation and US vs Huawei/ZTE: The Verdict.)

At the same time, Cisco ended a sales partnership with ZTE following an investigation into claims that the Chinese vendor had sold Cisco gear to Iran.

Then, only days later, Cisco highlighted discrepancies in Huawei's explanation of how an intellectual property battle between the two companies was concluded in 2004. (See Cisco Piles Pressure on Huawei.)

Cisco has been selling its routers in China for nearly 20 years and has its equipment deployed extensively in the IP backbones run by China Unicom and China Telecom Corp. Ltd. (NYSE: CHA), notes Marbridge Consulting. Its role in the country has attracted controversy before: now, it seems, that might happen again. (See Cisco's China Syndrome Reopens.)

— Ray Le Maistre, International Managing Editor, Light Reading

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