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Huawei backs out of US network equipment market, citing 'geopolitical reasons'

Huawei backs out of US network equipment market, citing 'geopolitical reasons'

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Huawei (STOCK)
Huawei (STOCK)

Following last October's Congressional report stating that Huawei’s networking equipment poses a national security risk, the business group in charge is announcing plans to back out of the US market, reports IDG. On Tuesday, Carrier Network Business Group CTO Li Sanqi announced that "apparently, due to whatever the geopolitical reasons, we are not focusing on the US market." Huawei’s critics in government and elsewhere have voiced concerns that the equipment could enable some in its home country of China to listen in on network traffic, although a probe into the issue ordered by the White House didn’t turn up any evidence of spying.

"Don’t get me wrong, I’d love to get into the US market."

Sanqui guesses that the US represents about 30 percent of the world’s carrier business and stresses that Huawei would love a piece of the action, if it was possible. "Don’t get me wrong, I’d love to get into the US market," he explained, while pointing to opportunities in growing markets like China. Concerns about Huawei networking equipment surfaced again late last month, when the US government reportedly demanded to oversee equipment purchases by Sprint and SoftBank in the US as a precondition for their proposed merger.

It’s not clear what the implication of the withdrawal is for Huawei’s consumer business group, which is responsible for smartphones like its new Ascend P2. When we spoke with the group’s CEO Richard Yu in January, he explained that the company "needs some time for the US carriers to accept high-end [products] from Huawei," but seemed hopeful, saying "the product is good enough… We need some time to get trust," while noting that the US government "is also an influence." Meanwhile, in Europe, Huawei announced that it's working to regain market share as it reels from a staggering 90 percent drop in its number of smartphone partners, reports Engadget.

Update: According to Huawei, the plan to pull out of the US network equipment market won't affect its smartphone business in the country. Huawei released the following statement:

“Long story short, the comment that was made reflects the realities of our carrier network business in the U.S. The growth of our carrier network business is primarily from developed markets in other parts of the world. Considering the situation we currently face in the U.S., it would be very difficult for the U.S. market to become a primary revenue source or a key growth area for our carrier network business. Nevertheless, our U.S. employees remain committed to providing quality services for our customers.”

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