Huawei defends security record as annual sales top 100 billion dollars

Chinese tech giant Huawei’s deputy chairman has defended the company’s commitment to security after a stinging British Government report added to Western pressure on the company.

The report accused the company of failing to repair dangerous flaws in its telecom technology.

Guo Ping’s comments came as Huawei, the biggest global maker of network equipment for phone and internet companies, announced last year’s sales surpassed 100 billion US dollars (£76.6 billion) despite US pressure on American allies to shun it as a security threat.

Accusations that Huawei, China’s first global tech brand, might facilitate Beijing’s spying threaten to hamper its access to global carriers that are preparing to invest billions of dollars in next-generation technology.

Britain’s National Cyber Security Centre added criticism on a different front on Thursday, accusing Huawei of “poor software engineering”.

The agency said in a report British researchers saw no sign that was due to Chinese government interference, but it said Huawei had not repaired flaws that might make its systems vulnerable to cyber attacks.

Mr Guo did not respond directly to the British report’s criticisms but said Huawei will work with regulators to improve security.

He noted the company has promised to invest 2 billion US dollars (£1.53 billion) over five years to improve its software engineering and expressed confidence British regulators will “increase their confidence” in Huawei over time.

“We prioritise cybersecurity and privacy protection even above our commercial targets,” Mr Guo said at a news conference. He said the British report showed Huawei products had no “backdoors” to permit eavesdropping.

Huawei is a global leader in developing fifth-generation, or 5G, telecoms. The technology is intended to vastly expand mobile networks to support self-driving cars, medical devices and factory equipment, but that makes it more politically sensitive.

Huawei is at the centre of US-Chinese tensions over technology and accusations of cyber-spying and violating trade sanctions on Iran.

The company’s chief financial officer was arrested in December in Canada on US charges of lying to banks about dealings with Iran. Beijing has detained two Canadians and blocked imports of canola from Canada in what is widely seen as an attempt to compel her release.

Huawei’s US market evaporated after a 2012 congressional report labelled the company a security threat, but sales elsewhere grew rapidly.

Huawei passed Apple last year as the number two global smartphone brand behind Samsung and earlier passed Ericsson as the number one network gear seller.

Australia, Japan and Taiwan have imposed curbs on use of Huawei technology, but Germany, France and other governments have resisted US demands to exclude it from 5G networks. Carriers complain that would reduce competition, raise prices and delay the rollout of 5G services.

Huawei has opened testing centres in Britain, Germany and Belgium for regulators to examine its products.

“We welcome the European Union’s attitude,” said Mr Guo. “They do not discriminate against vendors from any country.”

Chinese officials and some industry analysts have suggested the Trump administration might be exaggerating security concerns to hinder a competitor to US tech brands.

Huawei’s founder, Ren Zhengfei, told reporters earlier this year the latest US criticism had yet to hurt sales. But Mr Guo said on Friday the company has to spend more time talking to potential customers “to address their concerns”.

Despite that, Huawei’s sales last year rose 19.5% over 2017. That was driven by double-digit gains for its consumer and enterprise units, while sales of network gear to phone and internet carriers were unchanged at 62.3 billion US dollars.

Profit rose 25.1% to 8.6 billion US dollars (£6.6 billion)

Mr Guo blamed weak network gear sales on a temporary lull in investment by carriers. He expressed confidence 5G sales will take off this year.

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