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Blog: How is ZTE dodging the US Huawei heat?

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Huawei’s plan to storm the US smartphone market has all but gone up in smoke amid rising political tensions between China and the US.
In January, AT&T and Verizon reportedly backed out of deals to carry the vendor’s flagship Mate 10 Pro device, and Best Buy, the company’s retail lifeline in the US, now appears to be severing ties. Huawei’s protests it has a “proven history of delivering products that meet the highest security, privacy and engineering standards in the industry and are certified by the Federal Communications Commission for sale in the US” have fallen on deaf ears.
The company told Mobile World Live in a statement it remains “committed to earning that same trust with US consumers and making our products accessible in as many ways as possible”. But the situation doesn’t appear likely to get any better, as US President Donald Trump signed an order Thursday (22 March) implementing $60 billion in tariffs imports from China.
But not all China-based vendors are suffering as much as Huawei in the stateside market.
Curiously immune from the backlash is ZTE, which maintains partnerships with several dominant operators and remains the number two vendor in the US prepaid smartphone sector (and number four overall in smartphones) despite the storm.
Canalys research analyst Vincent Thielke said it’s “puzzling why only Huawei has taken the beating it has,” given soured relations with China overall.
Linda Sui, Strategy Analytics’ director of wireless smartphone strategies, suggested to Mobile World Live there are several reasons ZTE faces fewer headwinds in the US, not the least of which is Huawei’s strength.
ZTE is viewed as less of the threat due to its reliance on Qualcomm chipsets for its handsets (despite having its own chipset business) and its less prominent role in the global equipment market, Sui mooted. In contrast, she noted Huawei uses its own Kirin chipset in its flagship phones and recently made strides to surpass Ericsson as the world’s largest telecom equipment vendor. Additionally, Huawei is a more vocal participant in the 3GPP’s ongoing 5G standards process. Sui said this combination of factors caused the government and some companies to flag Huawei as “the top threat/challenger, now and in the future”.
Thielke concurred, adding: “The US doesn’t want to support China or any other power achieving 5G leadership, which has been demonstrated in the Broadcom/Qualcomm [deal] blocking.”
Both Thielke and Sui also noted ZTE has been established in the US for many years, while Huawei is still seeking acceptance in the market. In addition to the aforementioned partnership with Qualcomm, ZTE enjoys relationships with all of the major US operators and has many sponsors in the country, the analysts said.
Thielke explained: “ZTE has been in the US market for much longer and has made significant investments in the US economy. Having deeper roots in the US is one reason why ZTE has been able to remain strong while Huawei takes the beating.”
Huawei executives’ ties to the Chinese government and military, as well as a lack of transparency, are also held against the company by US officials. Sui pointed out Huawei’s founder Ren Zhengfei served in the Chinese army, while its chairman Sun Yafang formerly worked in the Chinese government’s security sector. Additionally, where ZTE is a publicly listed company, Huawei is privately-owned and therefore less transparent financially (although Huawei does make a point of reporting its half-year and annual results).
But while ZTE dodged much of the worst thus far, Sui and Thielke said the company remains vulnerable to the escalating tensions between the US and Chinese governments.
“All is about politics,” Sui concluded: “There is little Huawei or ZTE can do.”
The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

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