Small Deal Brings Scrutiny to Huawei

Huawei Technologies Ltd., whose efforts to buy big U.S. companies have been stymied by security concerns, has landed in hot water in Washington for acquiring a small technology firm without first running the deal by the government.

In May, the Chinese telecom gear maker paid $2 million to acquire staff and intellectual property of 3Leaf Systems, a Bay Area start-up that developed technology for making collections of server computers work together like a more powerful machine.

Huawei and former 3Leaf executives say they didn’t think the acquisition required a review by the Committee on Foreign Investment in the U.S., or CFIUS, because they didn’t buy all of the company’s assets. The inter-agency body reviews acquisitions that could have national security implications.

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