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Despite ties to China's PLA, Chinese company did not actively engage in spying, yet

fiery Congressional report singled out two top Chinese equipment manufacturers -- ZTE Corp. (SHE:000063) and Huawei Technologies Comp. (SHE:002502) -- as a national security threats. However, new details are emerging which suggest that the worst case scenario -- China leveraging its influence on the telecoms to steal U.S. commercial secrets -- has not yet happened.

I. White House Probe: No Spying by Huawei, but Lots of Security Holes

In Huawei's case, suspicion is heightened by the fact the company's founder and chief executive Ren Zhengfei is a former PLA officer, and subject to contractual relations between Huawei and China's People's Liberation Army.

But according to two sources which spoke with Reuters, an 18-month U.S Intelligence review on behalf of the White House found no evidence that Huawei had spied on U.S. companies.  White House National Security Council spokeswoman Caitlin Hayden released a carefully worded comment, remarking, "The White House has not conducted any classified inquiry that resulted in clearing any telecom equipment supplier."

But the Reuters sources concurred -- Huawei was not cleared of being considered a security risk, but critically it was not for the spying question.  According to the sources Huawei was instead considered to risky for the government to use as a contractor due to vulnerabilities in its firmware and software, which could leave its telecommunication equipment vulnerable to hacker intrusions.

Describes one source of Huawei's code, "We found it riddled with holes."

Huawei router
Huawei's routers are reportedly riddled with security holes -- some of which some analyst claim are deliberate back doors. [Image Source: The Hacker News]

Networking expert Felix Lindner agrees, saying that Huawei's problems appear to be more than likely due to sloppy coding rather than deliberate sabotage.  He reveals, "I'd say it was five times easier to find one in a Huawei router than in a Cisco one."

The supposed classified investigation involved interviewing over 1,000 telecommunications equipment buyers asking them questions regarding Huawei and other top Chinese OEMs.  

China's government, as well as Huawei and ZTE, attacked the Congressional report and the suggestion that the Chinese OEMs should be banned from the U.S. market.  A ZTE spokesperson pointed out that most American electronics firms also manufacture their electronics in China.  Huawei's U.S. spokesperson Bill Plummer commented, "Huawei is a $32 billion independent multinational that would not jeopardize its success or the integrity of its customers' networks for any government or third party. Ever."

The Congressional report suggests its recommendations were based partially on a "classified annex", a source Reuters suggests is likely the 18-month intelligence probe.

II. Possibility for Future Spying is Still Strong

It's important to note that the report does not completely clear Huawei.  One source, who investigated Huawei's products between 4 and 6 years ago on behalf of the intelligence community, claimed to Reuters that he had observed code snippets that appeared to be so-called "back-doors" -- deliberately inserted security flaws that would allow later exploitation.  Huawei has repeatedly denied such holes exist, amid rumors.

Chris Johnson, a form China analyst for the U.S. Central Intelligence Agency tells Reuters that even if the unconfirmed classified report did clear Huawei of any obvious deliberate spying, that it still represents a major threat in the future tense. 

Ren Zhengfei
Ren Zhengfei, founder and CEO of Huawei, is a former PLA officer. [Image Source: CFP]

That line of logic has led Canada and Australia to join the U.S. in banning Huawei's telecommunications equipment from government networks.  However, Britain recently offered up a dissenting take when its government security experts declared Huawei fully vetted and capable of bidding on government contracts.

Source: Reuters



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RE: Either Way...
By Reclaimer77 on 10/18/2012 7:54:37 PM , Rating: 2
Yup, I'm nuts. It's all a huge conspiracy to favor domestic brands. Hell Felix Lindner is in on it too apparently! And back in freaking JULY a German security expert said the same thing. Key word, GERMAN you stupid fucks.

http://news.cnet.com/8301-1009_3-57482813-83/exper...

You guys are idiots. Either prove that these routers have no flaws, and it's a big lie, or shut up. You wouldn't even run one of these routers in your house! They are THAT bad. And you want the Government buying them??

My point was it's impossible to engage in true "protectionism" here. Even if you buy an American router, it's been made in China. Or the parts are from China. Either way, they get a steady revenue stream.


RE: Either Way...
By MechanicalTechie on 10/18/2012 8:20:01 PM , Rating: 1
Wow.. getting a little emotional are we?? So I guess i have to spell it out for you.

Having security flaws is by no means a reason to try and ban a product. Just dont use it.. its that simple.

And Yes their is a favour to use domestic brands.. no question about it.


"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer














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