Huawei’s rapid growth, alleged theft helped sow mistrust in U.S.
The U.S. has pushed European governments to avoid Huawei’s gear, saying it’s an enabler for Chinese espionage, which the company has always denied
HUAWEI TECH NOLO GIES Co. wanted a better way to test its telephone handsets, so it sent an engineer to see “Tappy,” the robot in partner company TMobile US Inc.’s laboratory in Bellevue, Washington.
“Tappy,” computer-driven and tireless, taps on touch screens, simulating weeks of use in a day. The Huawei engineer was curious about Tappy’s fingertips. So he slipped one into a laptop bag and left with it, in an act TMobile branded theft.
The 2013 incident, described in a lawsuit filed the next year by T-Mobile, is the sort of alleged behavior by China’s top telecommunications equipment maker that has alarmed security experts. Now some are warning against the use of Huawei gear in the next-generation 5G network being assembled to connect factories, vehicles, homes, utility grids and more.
“They’ve surpassed everyone else, and the way they’ve done that is through copycat technology and ruthlessly stealing intellectual property from Western companies,” said Jeff Ferry, an economist with Coalition for a Prosperous America, an advocacy group close to the Trump administration and its China hawks.
Representatives of Huawei’s Chinese headquarters referred calls to Chase Skinner, a San Francisco-based Huawei spokesman, who declined to comment. Huawei has regularly denied that it steals intellectual property or unfairly copies technology from other companies. It said this week that blacklisting its equipment without proof will hurt the industry and disrupt the development of new highspeed technology.
But Huawei’s conduct is drawing renewed scrutiny after the Dec. 1 arrest in Vancouver of Chief Financial Officer Meng Wanzhou on allegations she defrauded banks to violate Iranian sanctions. The daughter of Huawei’s billionaire founder Ren Zhengfei, she now faces extradition to the U.S. in a case that’s sparked a diplomatic row.
Meng’s arrest follows a long string of allegations by the U.S. government about a potential threat to network security. The U.S. has pushed European governments to avoid Huawei’s gear, saying it’s an enabler for Chinese espionage, which the company has always denied.
In 2012, the House Intelligence Committee published a report that described Huawei as “a company that has not followed United States legal obligations or international standards of business behavior.” The committee called on the U.S. intelligence community to “remain vigilant,” and said national security officials must block acquisitions involving Huawei or fellow Chinese gear maker ZTE Corp.
Years earlier, Cisco Systems Corp. sued to stop Huawei from selling datatraffic switches and routers allegedly based on Cisco’s patents and copyrights. The litigation ended with Huawei agreeing to stop selling disputed products in 2003.
Related: Why U.S. Politicians Are Scared of China’s Biggest Tech Company
In 2010, the company failed to reach agreements to buy U.S. software and wireless-gear makers, reportedly because the sellers doubted the company would win approval. In 2008, Huawei and Bain Capital Partners LLC abandoned a bid for gear maker 3Com Corp. after failing to assuage security concerns raised by U.S. officials.
The Tappy caper involved a machine that used its mechanical arm to repeatedly poke and prod phone screens, in imitation of a human user, helping T-Mobile to improve the reliability of its handsets. Huawei wanted to know the size of the finger and the material out of which the conductive tip was made, T-Mobile told a federal court in Seattle.
The Huawei engineer, left alone in the lab, first slipped the fingertip behind a computer monitor then three hours later tucked it into his bag, T-Mobile told the court.
“There is some truth to the complaint,” Huawei spokesman William Plummer said at the time. He blamed “employees acting inappropriately in their zeal.” (Another worker had furtively taken photos of Tappy, according to T-Mobile.)
T-Mobile dropped Huawei as a supplier and in 2017 a jury awarded the American company $4.8 million in damages for breach of contract but rejected allegations of misappropriation of trade secrets. The two sides later agreed to drop the case after settlement talks. Michael Kipling, an attorney in the case for T-Mobile, declined to comment and attorney Bo Yue, for Huawei, didn’t respond to a request for comment.
The largest U.S. mobile providers, after urging by U.S. officials, have shunned Huawei network gear, and small providers are concerned they may be forced to rip out and replace Huawei products as the Federal Communications Commission moves against Huawei.
U.S. intelligence and law enforcement agencies harbor a deep suspicion of Huawei, exacerbated by its ties to China’s People Liberation Army, said James Lewis, director of the technology policy program at the Center for Strategic & International Studies in Washington.
“Deep connections with the PLA, industrial espionage, and subsidies from the Chinese government -- there you have it,” Lewis said in an interview.