Chinese telecom vendor ZTE to buy chips worth $3 billion from 5 US firms
27 Oct 2010
ZTE Corporation, China's second-biggest telecom equipment maker after Huawei Technologies, plans to buy semiconductor components worth $3 billion from five US technology companies over the next three years.
The plan to buy semiconductor components from Qualcomm, Broadcom, Texas Instruments, Freescale Semiconductor and Altera Corp comes amid opposition from some US lawmakers to what they see as a push by Shenzhen-based ZTE and rival Huawei into the US market.
"ZTE is committed to strengthening close ties with US chip vendors in order to develop highly competitive telecom solutions for the US market," the company's US unit said in a statement.
US and India are now the key markets for both the Chinese telecom gear makers, but they are facing opposition in both the countries because ZTE and Huawei, although being listed companies, have indirect ties to the Chinese government.
Both countries as well as a few other western nations fear that Chinese network gear could contain embedded spying devices, which would be a security risk for their respective countries.
Early this month, four US senators in letters endorsed by seven other senators, including Republicans on the intelligence committee, urged the Federal Communications Commission to weigh the risks of allowing ZTE and Huawei to sell networking equipment in the US as also Huawei bidding to be a supplier for Sprint Nextel.
"At worst, Huawei's becoming a major supplier of Sprint Nextel could present a case of a company, acting at the direction of and funded by the Chinese military, taking a critical place in the supply chain of the US military, law enforcement and private sector," the letter said.
In June 2010, the US forced New Mexico-based Emcore Corporation, a maker of fiber optics, to abandon plans for a $27.75 million joint venture with China's Tangshan Caofeidian Investment Corporation citing national security concerns. (See: US torpedoes Chinese firm's fibre optic deal over security concerns)
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