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Huawei Still Knocking on US Door – but AT&T Deal Thwarted

Ray Le Maistre

Huawei was hoping to be a big talking point at the CES show in Las Vegas this week, and it is -- but not for the "right" reasons.

The CEO of the vendor's Consumer Business Unit, Chengdong (Richard) Yu, is delivering a keynote speech at 2 p.m. PST today, where he plans to talk about AI, IoT and smart devices: He can expect to be asked about Huawei's planned, but not fulfilled, relationship with AT&T.

The Chinese giant has confirmed to Light Reading that it had been working for some time on a smartphone distribution deal with AT&T, but that negotiations have (so far) come to nothing. Such a deal would be a first for Huawei and not only provide a significant sales channel in the US but also give the Huawei brand a major stamp of approval.

But it was not to be. "The US market presents unique challenges for Huawei, and while the Huawei Mate 10 Pro will not be sold by US carriers, we remain committed to this market now and in the future … Huawei will introduce new products to the US market, including details about their availability," stated the Chinese company, which will continue to use online channels for its mobile handset sales, which have propelled Huawei to challenge Apple as the number two vendor of smartphones worldwide. (See Huawei Hits $92B in 2017 Sales.)

AT&T had not responded to a request for comment as this article was published.

So the bad news for Huawei is that is was quite close to striking a landmark deal with one of the biggest brands in the US, but couldn't complete the deal. According to a Reuters report, security concerns were raised.

Those security concerns hang over Huawei in the US and date back to 2012, when major US operators that fulfill government contracts were basically warned off from deploying network equipment from either Huawei or ZTE, which were labelled as a security risk by the US House Permanent Select Committee on Intelligence. (See US vs Huawei/ZTE: The Verdict and China Lashes Out at 'Cold War Mentality'.)

That doesn't mean Huawei has no business in the US: It supplies networking equipment to regional and local operators, which do not fulfill government contracts, and it already sells its smartphones to US consumers, though not through the all-important mobile service provider channels. (See Huawei Working Hard for Rural Success.)

The slightly more encouraging news for Huawei is that AT&T even entertained striking a distribution deal: That in itself represents a small step forwards for a company that regards the US market as an opportunity that will, in time, open up.

Where Huawei may have more luck is with its Enterprise division, which develops and sells "cloud, campus networks, data centers, and IoT" technology to enterprise customers around the world. It's still a relatively small part of Huawei, less than 10% of revenues, but that nevertheless makes it a multi-billion-dollar business and one that is highly regarded for its technology (by European and Latin American customers, at least).

So, yet another rebuff for Huawei in the US market. But you'd be mistaken if you think it won't carry on knocking on the door.

— Ray Le Maistre, International Group Editor, Light Reading

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User Rank: Blogger
1/11/2018 | 3:33:46 AM
Burning bridges?
Sounds like Mr Yu couldn't resist the temptation to have a pop at AT&T....



And here is Huawei's announcement of its MATE 10 launch in the US market in Feb, including news that Gal Gadot will be its CEO (that's Chief Experience Officer). For those like me that do  not know who Ms Gadot is, she is the actress who played Wonder Woman in the recent Hollywood movie...





User Rank: Light Sabre
1/9/2018 | 5:55:11 PM
Re: Traction
No deal is done until its done.  And who knows who is lying to a reporter.  "Hey the US Government forced AT&T to pull out of a deal....".  If you think I am kidding about this, AT&T has actually gone back on deals that it had already started implementing because of other issues within the company.


Sterling Perrin
Sterling Perrin,
User Rank: Light Sabre
1/9/2018 | 4:28:12 PM
Re: Traction

The reporting from WSJ was that the deal was all set to be announced at CES and then AT&T pulled out at the last minute - implying (but not confirming) that House and Senate intelligence committees played a role. So that would be very different than the typical misinterpretation of traction by a supplier. No?


User Rank: Light Beer
1/9/2018 | 1:58:59 PM
Not the Only Chinese Vendor
Interesting that Huawei remains unable to consumate a smartphone distribution deal with AT&T. AT&T does distribute ZTE smartphones.
User Rank: Light Sabre
1/9/2018 | 12:26:52 PM
"The Chinese giant has confirmed to Light Reading that it had been working for some time on a smartphone distribution deal with AT&T, but that negotiations have (so far) come to nothing."

Doesn't that sound like any company trying to sell a large telco where the Sales guy comes back and says that he has "Traction".  I would bet that AT&T listened politely and took the information to Huawei's competitors as a stalking horse.


User Rank: Light Sabre
1/9/2018 | 11:31:16 AM
Trojan horsies
Given the current political climate, I wonder if Huawei would have success if it announced that every phone it sold in the U.S. would be manufactured in the U.S.
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