Huawei, ZTE Probed by Intelligence Agency

The potential threat to U.S. national security posed by Chinese telecom equipment vendors Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) is to be investigated by the U.S. House Permanent Select Committee on Intelligence (HPSCI).

The investigation will "review the extent to which these companies provide the Chinese government an opportunity for greater foreign espionage, threaten our critical infrastructure, and further the opportunity for Chinese economic espionage," noted the committee in an official statement.

As part of that announcement, HPSCI chairman Mike Rogers stated: "The fact that our critical infrastructure could be used against us is of serious concern. We are looking at the overall infrastructure threat and Huawei happens to be the 800 pound gorilla in the room, but there are other companies that will be included in the investigation as well. As the formal investigation begins, I stand by my caution to the American business community about engaging Huawei technology until we can fully determine their motives," added Rogers.

The HPSCI announced Thursday that since his appointment as the committee's chairman in January 2011, Rogers, a former FBI special agent, had been "adamant that the committee remain focused on the threat posed to our nation's security and critical infrastructure by the expansion of Chinese-owned telecommunications companies -- including Huawei and ZTE -- into our telecommunications infrastructure."

Rogers instigated a preliminary review of the "threat" posed by Huawei and ZTE, and the U.S. government's response to such a threat, in January. The results of that review suggest that the "threat to the supply chain constitutes a rising national security concern of the highest priority," according to the HPSCI.

Rogers isn't alone in his quest. Congressman Dutch Ruppersberger, a Ranking Member of the House Select Committee on Intelligence, added in the statement: "We already know the Chinese are aggressively hacking into our nation's networks, threatening our critical infrastructure and stealing secrets worth millions of dollars in intellectual property from American companies. This jeopardizes our national security and hurts U.S. competitiveness in the world market, costing our country countless jobs. The same way hacking can be a threat, vulnerabilities can derive from compromised hardware on which our telecommunications industry rely. The purpose of this investigation is to determine to what extent Chinese communications companies are exploiting the global supply chain and how we can mitigate this threat to our national and economic security."

Other U.S. politicians are also worried about the security threat posed by Huawei's business in the country. (See US Gets Worried About Huawei .)

News of the investigation places added pressure on Huawei in the U.S., where it is already smarting at having been blocked from bidding for an emergency services wireless network deal earlier this year and is also facing criticism over its business in Iran. (See US Blocks Huawei LTE Bid and Should Huawei Do Business in Iran?)

Huawei is keen on establishing itself as a trusted supplier of telecom and enterprise technology in North America and recently showed off its new line of enterprise equipment at Interop in New York. (See Interop Wrap: Huawei's Enterprising Campaign and Huawei Makes Its Enterprise Pitch.)

Responding to the HPSCI decision, ZTE issued the following statement: "ZTE is wholly committed to transparency and will cooperate in addressing any inquiries regarding our business. Our company is publicly-traded with operations in more than 140 countries and we are confident a fair review will further demonstrate ZTE is a trustworthy and law-abiding partner for all U.S. carriers and their customers." And in an emailed response to Light Reading, Huawei noted:

— Ray Le Maistre, International Managing Editor, Light Reading