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Huawei Still Knocking on US Door – but AT&T Deal Thwarted

Chinese giant was hoping to seal a smartphone distribution deal with AT&T but higher powers are still wary of Huawei, it seems.

January 9, 2018

3 Min Read
Huawei Still Knocking on US Door – but AT&T Deal Thwarted

Huawei was hoping to be a big talking point at the CES show in Las Vegas this week, and it is -- but not for the "right" reasons.The CEO of the vendor's Consumer Business Unit, Chengdong (Richard) Yu, is delivering a keynote speech at 2 p.m. PST today, where he plans to talk about AI, IoT and smart devices: He can expect to be asked about Huawei's planned, but not fulfilled, relationship with AT&T.The Chinese giant has confirmed to Light Reading that it had been working for some time on a smartphone distribution deal with AT&T, but that negotiations have (so far) come to nothing. Such a deal would be a first for Huawei and not only provide a significant sales channel in the US but also give the Huawei brand a major stamp of approval.But it was not to be. "The US market presents unique challenges for Huawei, and while the Huawei Mate 10 Pro will not be sold by US carriers, we remain committed to this market now and in the future … Huawei will introduce new products to the US market, including details about their availability," stated the Chinese company, which will continue to use online channels for its mobile handset sales, which have propelled Huawei to challenge Apple as the number two vendor of smartphones worldwide. (See Huawei Hits $92B in 2017 Sales.)AT&T had not responded to a request for comment as this article was published.So the bad news for Huawei is that is was quite close to striking a landmark deal with one of the biggest brands in the US, but couldn't complete the deal. According to a Reuters report, security concerns were raised.Those security concerns hang over Huawei in the US and date back to 2012, when major US operators that fulfill government contracts were basically warned off from deploying network equipment from either Huawei or ZTE, which were labelled as a security risk by the US House Permanent Select Committee on Intelligence. (See US vs Huawei/ZTE: The Verdict and China Lashes Out at 'Cold War Mentality'.)That doesn't mean Huawei has no business in the US: It supplies networking equipment to regional and local operators, which do not fulfill government contracts, and it already sells its smartphones to US consumers, though not through the all-important mobile service provider channels. (See Huawei Working Hard for Rural Success.)The slightly more encouraging news for Huawei is that AT&T even entertained striking a distribution deal: That in itself represents a small step forwards for a company that regards the US market as an opportunity that will, in time, open up.Where Huawei may have more luck is with its Enterprise division, which develops and sells "cloud, campus networks, data centers, and IoT" technology to enterprise customers around the world. It's still a relatively small part of Huawei, less than 10% of revenues, but that nevertheless makes it a multi-billion-dollar business and one that is highly regarded for its technology (by European and Latin American customers, at least).So, yet another rebuff for Huawei in the US market. But you'd be mistaken if you think it won't carry on knocking on the door.— Ray Le Maistre, International Group Editor, Light Reading

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