In signs of escalating trade tension with China, US officials are demanding that Huawei turn over information about shipments to Cuba, Iran, North Korea, Sudan and Syria that may have included components from Huawei's US suppliers.
That investigation comes after the US recently blocked sales of US products to ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), Huawei's smaller Chinese rival, and will fuel concern about a full-blown trade war between the US and China. (See ZTE CEO to Quit in US Export-Ban Dispute.)
Huawei is already effectively locked out of major opportunities in the vast US market, where officials that deem it to be a security risk have pressured the biggest carriers to buy their network equipment elsewhere.
According to the New York Times report, officials want Huawei to provide information about shipments to blacklisted countries over the past five years.
Further action against Huawei could meet with a backlash from China and have repercussions for companies that do business with the equipment maker globally.
The move could also hurt US suppliers to Huawei, including Lumentum Holdings Inc. , Finisar Corp. (Nasdaq: FNSR) and NeoPhotonics Corp. (NYSE: NPTN), according to Simon Leopold, an analyst at Raymond James & Associates.
"Companies with China exposure could face a less receptive environment in retaliation, including Cisco, which generates a low single digit percent of sales from China," writes Leopold in a research note.
Leopold believes there is currently more risk to component suppliers than systems companies but says a trade war could "affect many" organizations.
Huawei last year overtook Ericsson AB (Nasdaq: ERIC) to become the world's biggest supplier of network equipment to communications service providers in terms of sales. (See Huawei's Carrier Division Set to Dwarf Ericsson by 2018.)
Despite its situation in the US, Huawei now caters to a number of the biggest telcos in Europe, Africa, Latin America and across Asia, where it has benefited in particular from a 4G boom in the Chinese market in recent times.
— Iain Morris, , News Editor, Light Reading