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Chinese firms bolster smartphone offerings to offset US infrastructure concerns

Huawei's Ascend W1

With both firms facing resistance in the US to their network infrastructure businesses, Chinese vendors Huawei and ZTE are instead stepping up their efforts in the handset space, with both unveiling high-end smartphones at CES in Las Vegas this week.

In October last year, a US House Intelligence Committee report warned operators that the companies pose a threat to the country’s national security. However, at the time David Dai Shu, ZTE’s director of global public affairs, told Telecoms.com that the report is only expected to have a minimal impact on ZTE’s business in the US. The firm generated around $400m in revenue in the country last year, but only around $30m was from its infrastructure business, he said.

The firm is now aiming to build on its success in the handset space and has unveiled the Grand S handset at CES; a high-end handset, marking a departure from the low-end segment the firm has traditionally targeted. The LTE handset runs Google’s Android Jelly Bean OS and is powered by a 1.7GHz quad-core Snapdragon S4 processor.

The firm has its sights set on the US to lead adoption of the device, and Lixin Cheng, chief executive of ZTE USA, told Dow Jones Newswire in an interview that the firm is not worried about its reputation in the US following the recent House Committee report, as the “US controls the core part of the product”, referring to the device’s Qualcomm chip and Google’s software.

Rival Huawei meanwhile unveiled its first Windows Phone 8 smartphone at the show. The Huawei Ascend W1 is 10.15mm thin and is also powered by a Qualcomm Snapdragon S4 processor.

“The addition of the Ascend W1 to our smartphone portfolio gives consumers access to an even wider range of Huawei smartphones,” said Richard Yu, CEO, Huawei Consumer Business Group. “At a price that makes sense to consumers, Ascend W1 underscores our commitment to put smartphones within reach of every consumer.”

The firm has also stepped up its presence in Ireland, after announcing the opening of a new research and development centre spread across two sites in Cork City and Dublin. Huawei will create jobs for over 50 highly-skilled research professionals who will contribute a broad range of skills and expertise to the company’s global operations. Initially the centre will focus on Huawei’s next generation Customer Experience Management Product, SmartCare,  and future expansion at the sites will extend R&D functions to cover a wider range of IT software projects.

Minister for jobs, enterprise and innovation, Richard Bruton TD, said: “Huawei is one of the companies that I met on my recent trade mission to China and today’s announcement that they are opening a new research and development centre creating an additional 50 new jobs in Ireland is very welcome.”

He added that international ICT R&D is a key sector in the country’s Action Plan for Jobs, and in the past 18 months the Irish government has implemented a number of changes to support expansion and job creation in this sector.

“In recent months we have seen some good news in this sector and the government will continue to work hard on implementing the necessary changes to ensure that we can see further announcements like this in the near future,” Bruton added.

The announcement follows a pledge made by Huawei in the UK to invest £1.3bn ($2bn) in the country, where it intends to create 700 more jobs  by 2017.

The firm, which already employs over 800 people in the UK, said that it will invest £650m in ten “global centres of technical and financial excellence”, including group-wide research and development facilities. It will also double its procurement  over next five years, by committing to procure £650m on products and services in the country.

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