What to know about China's Huawei – and what's behind its battle with the U.S.
China's Huawei is one of the world's largest telecommunications companies — millions of people use their phones, and its equipment and technology make it the driving force in 5G, the emerging standard that promises blazing-fast speed on wireless networks.
But Huawei is also caught in a fight with the U.S. government, which alleges it works with the Chinese government to steal from U.S. companies, and that it has illegally done business with Iran.
Huawei's founder and president, Ren Zhengfei, denied the allegations in an interview with "CBS This Morning" co-host Bianna Golodryga, his first TV interview with an American journalist.
"We never participate in espionage and we do not allow any of our employees to do any act like that," he said. "And we absolutely never install backdoors. Even if we were required by Chinese law, we would firmly reject that."
Here's what you need to know about Huawei.
Huawei is the No. 2 maker of smartphones — but Americans can't buy them
Huawei is the world's second-largest maker of smartphones, according to Gartner, behind only Samsung and routinely outselling Apple. But Americans can't easily buy its mobile devices because the U.S. House of Representatives and the FBI are concerned that Huawei is a threat to national security.
In early 2018, AT&T and Verizon both abruptly stopped distributing many Huawei devices, including the flagship Mate 10 Pro. Sprint and T-Mobile also don't sell modern Huawei devices.
Despite the negative headlines and a prohibition on government contracts in the U.S. that has led the company to nearly disappear from the American market, Huawei is growing. The $100 billion company is the world's largest telecommunications equipment manufacturer and may surpass Samsung as the largest mobile phone manufacturer.
It is the leader in 5G
Huawei is also poised to become the world's largest supplier of 5G infrastructure, the next generation of wireless technology. The company has been particularly adept at getting its patents adopted by 3GPP and the International Telecommunication Union, two of the major groups that establish international telecommunication protocols.
The U.S. claims Huawei is a security risk, and that it steals technology
Huawei's growth during the past few decades has been accompanied by suspicions about its connections to the Chinese government, and fears of espionage.
Concerned that Huawei 5G hardware could be used to harvest data, the U.S. government advised the European Union and other allies to consider cybersecurity risks to the global telecommunication supply chain before adopting Huawei hardware.
"The U.S. advocates for secure telecoms networks and supply chains that are free from suppliers subject to foreign government control or undue influence that poses risks of unauthorized access and malicious cyber activity," said State Department spokesperson Joseph Giordono-Scholz in a statement to CNET.
Those claims have led to charges from the U.S. Department of Justice
The suspicions about Huawei turned to actual charges in December, when Meng Wanzhou, the company's CFO — and daughter of Ren Zhengfei — was arrested in Canada at the United States' request.
On Jan. 28, the Department of Justice unveiled two sets of charges against Huawei and Meng. In one indictment, the company was charged with theft of trade secrets conspiracy, attempted theft of trade secrets, seven counts of wire fraud, and one count of obstruction of justice, in an alleged plot to steal prized T-Mobile technology, "Tappy," a robot arm that tests phones by tapping on them.
The DOJ says that in 2012, Huawei launched a "concerted effort to steal information" about Tappy in order to build its own robot, though with a much less whimsical name: "xDeviceRobot."
The indictment describes a scheme that ended with a Huawei engineer leaving a T-Mobile facility with Tappy in his laptop bag, and returning it the next day, but only after taking measurements and photos.
Ren denied that Huawei had any role in stealing technology related to Tappy, when pressed by Golodryga. "I punish employees for improper behavior, because if you don't do that, a company of this scale, how can we survive? And our company highly respects intellectual property," Ren said.
The Tappy story may sound like a corporate caper, but the second set of charges unveiled Jan. 28 are potentially much more serious.
Did Huawei violate sanctions against Iran?
The company was charged with Iran sanctions violations, wire fraud, money laundering, conspiracy to defraud the United States and obstruction of justice related to a grand jury investigation. Meng is charged with bank fraud, wire fraud, and conspiracies to commit bank and wire fraud in the case.
The Justice Department claims in this indictment that Huawei has been operating a business in Iran as a subsidiary, while claiming the company, Skycom, is not affiliated with Huawei. Prosecutors say the alleged scheme has allowed Huawei to do millions of dollars in business in Iran, despite U.S. sanctions barring such transactions in the country.
The indictment claims Meng served on the board of directors of Skycom from February 2008 through April 2009, and in the years since, was among multiple Huawei employees who lied to banks about the company's relationship to Skycom.
What's next for Meng?
On Dec. 8, China summoned the Canadian ambassador and warned of "grave consequences." Over the course of the next month, 13 Canadians were arrested in China.
Meng is being held in Canada pending extradition. She was granted $10 million bail Dec. 11.
Meng in under court-ordered restrictions governing when she can leave her home, and is under continuous monitoring. Her next court date is set for March 6.
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