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Huawei pumps $6bn sweetener into US biz trio

Qualcomm, Avago and Broadcom land contracts

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Chinese telecoms equipment maker Huawei has taken its turn at cementing US-Sino relations by announcing contracts worth $6bn with California OEMs Qualcomm, Broadcom and Avago - and reckons this will create tens of thousands of job “opportunities” in the States.

The three-year deals will provide a much needed cash injection into the Californian and US economies, although there were few details on exactly how the money would be spent.

Canned statements from Qualcomm and Avago pointed to the former’s “Snapdragon processors and multimode broadband modem products” while the latter talked about supporting the “mobile applications and cellular infrastructure market”.

Huawei did not immediately respond to a request for more information. The firm’s senior corporate VP Chen Lifang said in a prepared statement that the deal showed Huawei was a “local economy contributor” with long term relationships with some key Silicon Valley manufacturers.

“The US holds the leading position in the ICT industry, and when coupled with Huawei’s long-term dedication to innovation in the US market, the result is a strategic collaboration to develop a more diversified, balanced and healthier global ICT ecosystem,” she added.

Huawei’s $6bn windfall comes at an expeditious moment for the electronics giant following the visit of Chinese vice-president Xi Jinping to Washington and given the on-going House of Representatives investigation into the threat of cyber-espionage posed by firms like itself and ZTE.

The investigation was announced in November 2011 [PDF] by Intelligence Committee chairman and former FBI agent Mike Rogers, who argued that the continuing expansion of Chinese-owned telecommunications companies into the United States’ own telecoms industry represented a high-priority threat to national security.

“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,” said Rogers at the time.

“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.”

Huawei has long been suspected of links to the Chinese government and not without reason. The firm’s founder, president and CEO Ren Zhengfei served in the People’s Liberation Army while a US intelligence report last year tied chairwoman Yun Safang to the mysterious Ministry of State Security.

As a result the firm has received a sometimes hostile reception in the US despite claiming it has nothing to hide. In February 2011 it was forced to walk away from a proposed acquisition of server company 3Leaf after pressure from the Committee on Foreign Investment in the United States.

It's also likely that the Huawei-Symantec joint venture will leave the US once Huawei buys out Symantec's stake in the business

Despite this, however, the firm has a sizeable presence in the US since establishing a base there in 2001, with an HQ in Texas, 13 regional offices and seven R&D centres. Huawei claims it has invested over $30bn in procurement contracts there since.

It remains to be seen whether this $6bn cash injection will soften attitudes towards the company in Washington. ®

Internet Security Threat Report 2014

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