Security Concerns Over China Stretch to ZTE

Published on October 29, 2010
by Spencer E. Ante and Shayndi Raice

U.S. security concerns about Chinese telecommunications suppliers don’t stop with Huawei Technologies Co., which has so far taken much of the heat.

Some U.S. officials have accused smaller peer ZTE Corp. of being a potential security threat as well. Four lawmakers sent a letter Oct. 19 urging the Federal Communications Commission to take a closer look at ZTE and Huawei, and to consider restrictions that would make it harder for them to do business in the U.S.

ZTE, hardly a household name, is now the world’s sixth-largest seller of telecom gear, according to research firm IDC, and a frequent bidder for U.S. telecom work. It was founded in 1985 by a group of Chinese state-owned companies, which still hold a 17 percent ownership stake. But executives from ZTE’s U.S. arm say their company isn’t a security threat, and they are taking a series of measures designed to allay the fears of U.S. officials.

ZTE executives say they plan to set up a U.S. manufacturing facility within the next year or two, let third parties audit the company’s hardware and software, and are willing to share the company’s software code with U.S. officials. ZTE said Friday it has taken an initial step toward receiving the validation required for federal civilian agencies seeking to use the company’s technology.

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