Huawei Chief Security Office Says U.S. Should Go After Nokia, Others, To ‘Be Fair’

China US Huawei
AP Photo/Mark Schiefelbein

Washington’s not being inclusive.

Huawei shouldn’t be the only security villain on the market. Nokia and Ericsson also have close ties with the Chinese government in Asia, meaning their equipment, too, may be susceptible to backdoor openings for high-tech espionage, Andy Purdy, Huawei’s chief security officer in the U.S. told Becky Quick on CNBC’s Squawk Box on Tuesday.

Washington is considering requiring U.S. companies to pull Huawei components from certain telecommunication equipment, CNBC reported today.

Huawei is in total limbo. It’s the biggest name on the Commerce Department’s so-called “entity list” of foreign companies that require Washington’s permission before American firms can sell to them. Huawei has had some entity-list restrictions lifted and then reimposed since appearing on the list earlier this year as part of the ongoing trade war.

“There are around 200 companies in the U.S. waiting to sell to Huawei, and if they cannot we will have to find those products elsewhere, if forced too,” Purdy said.

Huawei is the world’s largest telecommunications equipment operator. Multinational chipmakers like Intel are big Huawei suppliers.

The U.S. position is that Chinese advanced technology companies have grown in prowess thanks in large part to intellectual property theft and closing its massive economy off to foreign competitors.

Huawei and the Chinese government see the attacks on the company as an affront to their own intelligence. The official position there is one of acknowledging past wrongs of some Chinese companies in this regard, but excluding Huawei from any wrongdoings.

Beijing also views the restrictions on Huawei as a way for the U.S. to curb Chinese advancement in 5G telecommunications, a global business where Huawei is winning contracts to build smart grids worldwide. Bogota, Colombia’s smart grid uses Huawei technology.

Purdy said it was hard to say how the entity list bans are hurting the company. Third-quarter revenues rose over 20%, and profits rose by 8% globally. “China is moving in the right direction on IP,” he said on Squawk Box today. “Let’s not just single out Huawei. If we are looking for security risks, we should treat all companies the same.”

China will pay what it takes to keep Huawei going.

Huawei is giving its employees bonuses totaling more than $285 million in what looks like an effort to provide a jolt to employee morale. Some 90,000 are getting an estimated $3,100 each, according to a company announcement circulated Tuesday on social media. Huawei’s full 180,000 employee base is also getting an extra month’s pay. Purdy said it was a “thank you” for coping with the trade war.

Purdy is not alone in saying Huawei will find components elsewhere. “If there is any harm, it will fall on U.S. companies,” wrote James Andrew Lewis, senior vice president for tech policies at the Center for Strategic and International Studies in Washington back in August.

“This kind of self-destructive tendency has been a hallmark of U.S. export policies, whose history is littered with examples where an overly risk-averse approach or overly broad restrictions damaged or even destroyed strategic U.S. industries,” says Lewis.

In the late 1980s, two Western companies sold advanced machine tools to the Soviet Union that made their submarines harder to detect. In response, the Reagan administration restricted those exports, along with other machine tool equipment. Lewis notes that those restrictions ultimately shrunk the machine tool industry in the United States. China now produces more advanced machine tools than the U.S., he wrote, though it is unclear in his essay if this is due to the natural ebb and flow of globalization or to Cold War policies that upended parts of the sector.

President Trump speaks to members of the Economic Club of New York later today. He is expected to talk about the progress, if any, on the phase one trade deal with China and a humming stock market.

If Trump says they are on course to a deal, China stocks are likely to rally. But if he says the trade talks have stalled again, both U.S. and China securities listed on the NYSE will take a hit.

Recent violence in Hong Kong could also derail the all-important phase one trade deal sooner than expected, providing no respite to Huawei in the meantime.

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Washington’s not being inclusive.

Huawei shouldn’t be the only security villain on the market. Nokia and Ericsson also have close ties with the Chinese government in Asia, meaning their equipment, too, may be susceptible to backdoor openings for high-tech espionage, Andy Purdy, Huawei’s chief security officer in the U.S. told Becky Quick on CNBC’s Squawk Box on Tuesday.

Washington is considering requiring U.S. companies to pull Huawei components from certain telecommunication equipment, CNBC reported today.

Huawei is in total limbo. It’s the biggest name on the Commerce Department’s so-called “entity list” of foreign companies that require Washington’s permission before American firms can sell to them. Huawei has had some entity-list restrictions lifted and then reimposed since appearing on the list earlier this year as part of the ongoing trade war.

“There are around 200 companies in the U.S. waiting to sell to Huawei, and if they cannot we will have to find those products elsewhere, if forced too,” Purdy said.

Huawei is the world’s largest telecommunications equipment operator. Multinational chipmakers like Intel are big Huawei suppliers.

The U.S. position is that Chinese advanced technology companies have grown in prowess thanks in large part to intellectual property theft and closing its massive economy off to foreign competitors.

Huawei and the Chinese government see the attacks on the company as an affront to their own intelligence. The official position there is one of acknowledging past wrongs of some Chinese companies in this regard, but excluding Huawei from any wrongdoings.

Beijing also views the restrictions on Huawei as a way for the U.S. to curb Chinese advancement in 5G telecommunications, a global business where Huawei is winning contracts to build smart grids worldwide. Bogota, Colombia’s smart grid uses Huawei technology.

Purdy said it was hard to say how the entity list bans are hurting the company. Third-quarter revenues rose over 20%, and profits rose by 8% globally. “China is moving in the right direction on IP,” he said on Squawk Box today. “Let’s not just single out Huawei. If we are looking for security risks, we should treat all companies the same.”

China will pay what it takes to keep Huawei going.

Huawei is giving its employees bonuses totaling more than $285 million in what looks like an effort to provide a jolt to employee morale. Some 90,000 are getting an estimated $3,100 each, according to a company announcement circulated Tuesday on social media. Huawei’s full 180,000 employee base is also getting an extra month’s pay. Purdy said it was a “thank you” for coping with the trade war.

Purdy is not alone in saying Huawei will find components elsewhere. “If there is any harm, it will fall on U.S. companies,” wrote James Andrew Lewis, senior vice president for tech policies at the Center for Strategic and International Studies in Washington back in August.

“This kind of self-destructive tendency has been a hallmark of U.S. export policies, whose history is littered with examples where an overly risk-averse approach or overly broad restrictions damaged or even destroyed strategic U.S. industries,” says Lewis.

In the late 1980s, two Western companies sold advanced machine tools to the Soviet Union that made their submarines harder to detect. In response, the Reagan administration restricted those exports, along with other machine tool equipment. Lewis notes that those restrictions ultimately shrunk the machine tool industry in the United States. China now produces more advanced machine tools than the U.S., he wrote, though it is unclear in his essay if this is due to the natural ebb and flow of globalization or to Cold War policies that upended parts of the sector.

President Trump speaks to members of the Economic Club of New York later today. He is expected to talk about the progress, if any, on the phase one trade deal with China and a humming stock market.

If Trump says they are on course to a deal, China stocks are likely to rally. But if he says the trade talks have stalled again, both U.S. and China securities listed on the NYSE will take a hit.

Recent violence in Hong Kong could also derail the all-important phase one trade deal sooner than expected, providing no respite to Huawei in the meantime.

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I've spent 20 years as a reporter for the best in the business, including as a Brazil-based staffer for WSJ. Since 2011, I focus on business and investing in the big eme...