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Huawei says it isn't quitting US despite 'groundless suspicions'

The CEO of Huawei's consumer business tells CNET that it's maintaining its US operations despite the government's national security concern.

Josh Miller/CNET

You'd think that after launching the Huawei P20 Pro, a high-end phone with muscular specs that challenge the Galaxy S9, the world's third-largest phone maker would bask in the glow and wait for preorder sales to rush in.

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Huawei's P20 Pro, left, has three cameras on the back.

Josh Miller/CNET

But for the China-based Huawei, those preorders from the all-important US market will never arrive: The phone won't be sold here by any major retailer or wireless carrier. Still, the CEO of Huawei's consumer business group, Richard Yu, said his company isn't pulling out of the US.

"We are committed to the US market and to earning the trust of US consumers by staying focused on delivering world-class products and innovation," Yu told CNET in an email. "We would never compromise that trust."

The comments mark a defiant response to the vague warnings made by US officials that have effectively crippled Huawei's ability to get its phones in front of consumers. In January, AT&T pulled out of a landmark plan to sell the Mate 10 Pro, an important high-end Huawei phone. Verizon reportedly also scuttled a deal to carry the device based on political pressure.

CNET was also first to report that Best Buy, the US' largest electronics retailer, dropped Huawei phones from its roster.

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Huawei, which makes carrier networking equipment in addition to phones, has come under fire from the US government. Heads of the CIA, FBI and NSA bluntly advised all Americans not to purchase or use Huawei products and services during open Congressional testimony in February, out of concerns that Huawei products are used to spy on Americans.

Yu dismissed those concerns.

Huawei's consumer products CEO Richard Yu shows the TalkBand N1. When they're not plugged into the ears, a magnetic clasp lets them snap around the neck like a necklace.

Huawei's consumer products CEO, Richard Yu, in 2014.

Stephen Shankland/CNET

"The security risk concerns are based on groundless suspicions and are quite frankly unfair," Yu said. "We welcome an open and transparent discussion if it is based on facts."

Huawei has long touted its relationships with other carriers and countries around the world. 

"We work with 46 of the 50 global operators," Yu told CNET, "and have maintained a very strong security record because security is one of our top priorities."

Huawei employs more than 1,000 people in 13 US offices, he added.

Does Huawei need the US to grow? Maybe not

While Huawei could grow bigger and faster with US sales, the company may not need to be here.

"Even without the United States market, we'll be No. 1 in the world," Yu said earlier this week.

From a financial perspective, Huawei is doing just fine without a presence in the US. On Friday, it released its 2017 earnings report, which saw its net profit rise by 28.1 percent from a year ago. The company shipped 153 million phones last year as revenue from that business rose 32 percent from a year ago. 

In comparison, Apple, the most profitable player in the smartphone market, sold 216.8 million iPhones in its fiscal 2017 year, according to Statista.

Still, an entry into America would help. With 11.6 percent of the global smartphone market, the US is the second largest market, behind China at 30.4 percent, according to IHS Markit. India, the third-largest smartphone market, comes in at 8.5 percent.

"Huawei will be successful without the US because of their designs and innovations," said Wayne Lam, an analyst at IHS Markit. "There are still other global markets where they can enter and succeed."

Even if Huawei doesn't need the US, it wants it.

"We recognize we are not a known brand in the US and we need to build our brand here," Yu said. "Our first step is to win the trust of consumers."

Corrected at 11:32 a.m. PT: To note that Apple is the most profitable smartphone maker, and not the largest player.

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