During a Senate Intelligence Committee hearing on Tuesday, the heads of six major U.S. intelligence agencies warned that American citizens shouldn’t use smartphones made by Chinese tech firms Huawei and ZTE. The recommendations, which are nothing new, came from a group that included the heads of the FBI, CIA, NSA, and the director of national intelligence and has to do with those firms close ties to the Chinese government.
“We're deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don't share our values to gain positions of power inside our telecommunications networks,” FBI Director Chris Wray said during his testimony, according to a CNBC report. “That provides the capacity to exert pressure or control over our telecommunications infrastructure. It provides the capacity to maliciously modify or steal information. And it provides the capacity to conduct undetected espionage.”
When asked by a lawmaker during the hearing, all of those in attendance to testify said they would advise Americans to not use products or services from Huawei. The fears stem, mainly, from the fact that Huawei was founded by Ren Zhengfei, a former engineer in China’s People’s Liberation Army. It also doesn’t help that U.S. lawmakers often describe the company as “an arm of the Chinese government.”
Huawei, in response to the most recent statements made by the U.S. intelligence community, sent the following statement to Dealerscope: "Huawei is aware of a range of U.S. government activities seemingly aimed at inhibiting Huawei's business in the U.S. market. Huawei is trusted by governments and customers in 170 countries worldwide and poses no greater cybersecurity risk than any ICT vendor, sharing as we do common global supply chains and production capabilities. We are committed to openness and transparency in everything we do. Ultimately, Huawei will continue to develop its global business through a significant commitment to innovation and R&D and to delivering technology that helps our customers succeed in all markets that value the innovation and value it delivers."
Taking matters a step further with regard to their fear of Chinese espionage through foreign-made smartphones, it’s been reported that U.S. lawmakers are considering a new bill that would ban the U.S. government from using any phones or products manufactured by Huawei or ZTE. That shouldn’t be too much of an issue considering a majority of Congress and the government still use Blackberry devices and services.
That line of thinking though, which is shared seemingly by the entire U.S. intelligence community, has held Huawei—the second-largest smartphone manufacturer in the world behind Samsung—back from realizing true success in the lucrative U.S. smartphone market through traditional means. The closest successful attempt to do so happened earlier this year as Huawei was preparing to launch their Mate 10 device. The company had a deal in place with AT&T to bring the Mate 10 into the U.S. through the second-largest carrier here, but pressure from lawmakers—which stemmed from those same security concerns—ultimately lead to them backing out of the deal at the last minute.
AT&T’s eleventh-hour decision is what caused Huawei CEO Richard Yu to go off script in a fairly epic rant against U.S. carriers during his keynote at CES 2018 last month. Though, it looks like those frustrations were truly aimed at the U.S. government for creating an environment of fear in the smartphone market.
As Dealerscope detailed in an in-depth report last fall, the global smartphone market has seen tremendous growth in the number of Chinese manufacturers, and those companies continue to make inroads from a market share perspective. Of course, Apple and Samsung continue to dominate both globally and here in the U.S., but the level of competition beyond that in the U.S. is practically nonexistent. Whereas Huawei recently overtook the number-two spot globally from Apple, the company doesn’t even crack the top five in the U.S.
ZTE, which does in fact hold about 10 percent of the U.S. smartphone market share, has had some success entering the market thanks to its friendly ties with the Japanese manufacturing scene and a lack of focus on succeeding in the Chinese market. Their phones are available through carriers like T-Mobile and Sprint, whereas Huawei owners in the U.S. are forced to buy their phones unlocked through retailers like Amazon and Best Buy.