Federal Communications Commission chairman Ajit Pai says Huawei and ZTE have close ties to the Chinese Communist party and that this decision sends a signal that any attempt by any company to compromise the United States' security networks will not be tolerated.
Huawei sold more smartphones around the globe than Samsung or Apple for the first time, according to research firm Canalys.
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Huawei’s smartphone sales in the second quarter of 2020 were down 5 percent at 55.8 million, but that still surpassed Samsung, which shipped just 53.7 million, a 30 percent drop compared to the second quarter of 2019.
The Chinese telecommunications giant was able to ride China’s economic recovery from coronavirus to its newfound dominance of the smartphone market.
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“If it wasn’t for COVID-19, it wouldn’t have happened,” Canalys Senior Analyst Ben Stanton said in the report. “Huawei has taken full advantage of the Chinese economic recovery to reignite its smartphone business. Samsung has a very small presence in China, with less than 1% market share, and has seen its core markets, such as Brazil, India, the United States and Europe, ravaged by outbreaks and subsequent lockdowns.”
Huawei did not immediately respond to a request for comment.
Huawei controls 72 percent of the market in mainland China, but just 28 percent of the market for the rest of the world, according to Canalys. The company has had trouble expanding outside of China in recent years due to security concerns in the United States and foreign countries.
In May of last year, the Department of Commerce added Huawei to its Bureau of Industry and Security Entity List, essentially blacklisting the company from using American technology. Earlier this month, Reuters reported that that rule was amended to allow U.S. companies to work with Huawei on 5G standards.
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The Trump administration has also ramped up the pressure on Huawei’s wireless network equipment. The Federal Communications Commission designated Huawei a national security threat last month and blocked U.S. wireless providers from using federal subsidies to buy Huawei’s equipment.
Federal Communications Commission Chairman Ajit Pai told FOX Business at the time that his agency found Huawei "had ties to the Chinese Communist Party, had ties to China’s military apparatus, the People’s Liberation Army." He also said Chinese companies are obligated to comply with requests from China's government, and not allowed to disclose their cooperation.
China's 2017 national security law states that “any organization or citizen shall support, assist, and cooperate with state intelligence work in accordance with the law, and maintain the secrecy of all knowledge of state intelligence work."
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Huawei has consistently denied that it is a security threat, saying in a fact sheet this year that the national security law has "safeguards that discharge individuals and organizations from providing support that would contradict their legitimate rights and interests."
Due to Huawei’s struggles in expanding in the United States, it has turned to Europe, saying this year that it “sees Europe as its second home base.”
“Huawei is now a part of the European fabric, an active player in shaping the digital economy for the future, contributing innovative technology to EU research projects and broad-ranging industryled cooperation initiatives such as those for connected vehicles, digital transformation and smart agriculture,” the company wrote.
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