The New York Times reports: American officials have long considered Huawei, the Chinese telecommunications giant, a security threat, blocking it from business deals in the United States for fear that the company would create “back doors” in its equipment that could allow the Chinese military or Beijing-backed hackers to steal corporate and government secrets.

But even as the United States made a public case about the dangers of buying from Huawei, classified documents show that the National Security Agency was creating its own back doors — directly into Huawei’s networks.

The agency pried its way into the servers in Huawei’s sealed headquarters in Shenzhen, China’s industrial heart, according to N.S.A. documents provided by the former contractor Edward J. Snowden. It obtained information about the workings of the giant routers and complex digital switches that Huawei boasts connect a third of the world’s population, and monitored communications of the company’s top executives.

One of the goals of the operation, code-named “Shotgiant,” was to find any links between Huawai and the People’s Liberation Army, one 2010 document made clear. But the plans went further: to exploit Huawai’s technology so that when the company sold equipment to other countries — including both allies and nations that avoid buying American products — the N.S.A. could roam through their computer and telephone networks to conduct surveillance and, if ordered by the president, offensive cyberoperations. [Continue reading…]

MIT Technology Review: How’s this for a tough sales job? The American sales reps of Huawei offer top-notch telecom gear at a 35 percent discount. But anytime they get near to closing a sale, their customers get a visit from the FBI or the U.S. Department of Commerce.

The message from the feds isn’t subtle: buy something else.

Huawei, based in Shenzhen, China, is the world’s largest seller of telecom equipment, commanding 20 percent of the market. Yet it is barely a factor in North America. Here its market share in optical equipment is just 1.4 percent, and in switches and routers it’s just 0.1 percent.

Just as Huawei has been shut out of the American market, leaks about the pervasiveness of spying by the NSA and other U.S. intelligence agencies might now hurt American companies abroad. Businesses are starting to talk of a “Snowden effect” of lost sales, dimmed prospects, and growing uncertainty, as they too come under a cloud of mistrust.

Huawei (pronounced wah-way) was founded in 1987 by Ren Zhengfei, a former military officer who splits the CEO job with executives who rotate every six months. As Huawei expanded overseas, suspicions began to swirl around the company, particularly in the United States. Its effort to buy 3Com, a networking company, was blocked by a trade panel that assesses national security risks. In 2011, Cisco Systems, a competitor, developed talking-point slides that laid out reasons for “Fear of Huawei.”

In 2012, partly at the Chinese company’s request, the U.S. House Intelligence Committee investigated and released a report. It offered no real proof of spying, yet it still concluded that the United States must “view with suspicion” progress by Chinese companies in the North America telecommunications market.

The concern was that somehow, with Huawei’s knowledge or without it, the Chinese government could use equipment sold by the company to eavesdrop or even to gain an advantage in a cyberwar. Huawei loudly denied the charges; it cried “discrimination.”

The irony now is that leaked National Security Agency documents suggest the U.S. was doing everything it suspected China of. The documents indicate that the U.S. may have compromised routers from Cisco, Juniper, and Huawei. It’s also believed to have weakened encryption products so the ciphers used by commercial software could be broken. [Continue reading…]