Uncle Sam investigates Huawei for possible naughty deals - report

Huawei could find itself in more trouble in the US as Uncle Sam has reportedly launched an investigation into possible breaches of trade controls on Cuba, Iran, Sudan and Syria.

The more Huawei seems to dominate the telecommunications world, the more the US government seems to mistrust it. The company is already banned from bidding for US government contracts, any further suspected naughty behaviour from the Chinese giant could see additional embargos placed on the business. Considering Huawei’s smartphone ambitions, such prohibitions would not be welcomed at all.

According to the New York Times, the United States Treasury Department’s Office of Foreign Assets Control is leading the investigation and has already sent an administrative subpoena to Huawei. The subpoena is not an accusation of any wrongdoing and does not necessarily form part of a criminal investigation, but it is a worrying sign, especially considering the recent precedent set by fellow Chinese telecoms company ZTE recently

The subpoena itself requests Huawei to detail technology and services provided to Cuba, Iran, Sudan and Syria over the past five years. Another complication is the role of US components in Huawei products. Excluding Huawei from the US market might be a headache, but perhaps a bigger one would be a ban on using US technologies in any Huawei product.

If Huawei is found to have violated rules in any territory which is on the US shit-list, the Department of Commerce could get involved which has the power to ban US companies from trading with other organizations. The risk here is not only losing the US market completely, but also Huawei’s supply chain being disrupted.

Another ban certainly wouldn’t be a good thing, but it also wouldn’t be the end of the world. Huawei’s current ban probably means US operators probably err on the side of caution when dealing with the Chinese giant to remain in the good books of sensitive Uncle Sam. This will probably factor into the procurement process. In fact, a CTO at one US operator (which shall remained unnamed) told us at MWC that he has essentially banned all interaction with Huawei because of the saga.

To date, Huawei has managed to build a pretty hefty profit margin, despite a large cold shoulder from the US; it wouldn’t be ideal for the consumer business but it won’t stop the world turning.