Chinese spying concerns hamper Huawei US retail expansion

10 Jan 2018

Huawei store in Shanghai. Image: J Lekavicius/Shutterstock 

Huawei’s expansion plans are floundering.

Ahead of CES 2018, Chinese smartphone player Huawei had been widely expected to announce a retail partnership with a major US carrier.

Its flagship Mate 10 Pro phone was rumoured to become available in the US with AT&T as its retail partner.

This didn’t come to pass, as The Wall Street Journal reported that Huawei pulled out of the deal to sell its own devices.

US security concerns

Security concerns raised by members of the US Senate and house intelligence committees were outlined in a letter sent to the FCC on 20 December.

The letter highlighted concerns about “Chinese espionage in general, and Huawei’s role in that espionage in particular”.

Another major US carrier, Verizon, is now facing pressure to cancel the launch of a Huawei smartphone later this year, according to Android Police.

The same reasons are being cited for the Verizon issue, and the company has already pushed back the release of the Mate 10 from summer to autumn of this year, with the deal likely to be thrown out completely.

Huawei responds

On 10 January, Huawei addressed the loss of the deal with AT&T in a statement: “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.”

The phone will still be sold through open channels if it is not picked up by a US retail partner.

William Plummer, Huawei’s Washington spokesperson, said: “Privacy and security are always our first priority.” He added that the company is compliant with the most stringent protection frameworks in the world.

This comes as general concerns about Chinese spying grow among US authorities. US money transfer firm MoneyGram’s acquisition by Chinese firm Ant Financial was quashed, with security risks also cited as the main rationale behind the decision.

Speaking to Reuters, Canalys analyst Mo Jia said that relying solely on open channels would make it difficult for Huawei to gain a significant foothold in the US market, as they count for a very low portion of sales.

He said the company’s proprietary chips could have been a bigger regulatory headache compared to other Chinese vendors that rely on US chips for their devices.

Huawei store in Shanghai. Image: J Lekavicius/Shutterstock 

Ellen Tannam was a journalist with Silicon Republic, covering all manner of business and tech subjects