Huawei open to more US acquisitions

22.04.2011
Huawei Technologies may seek more acquisitions in the U.S. after its ill-fated purchase of assets from 3Leaf Systems, and it thinks an ongoing dialog it has set up with the federal government could help to ease those deals through.

Earlier this year, the networking giant based in Shenzhen, China, on the recommendation of the Committee on Foreign Investment in the United States (CFIUS). FutureWei, Huawei's subsidiary for U.S. research and development, had acquired the assets of the Silicon Valley virtualization vendor for about US$2 million. It submitted the deal to CFIUS, a government agency that reviews foreign companies' investments in the U.S., after it had been completed. After initially , Huawei came to an agreement with the agency.

Though CFIUS weighed in against that deal, Huawei won't shy away from future purchases, according to Bill Plummer, vice president of external affairs for Huawei Technologies USA, which runs the company's U.S. business.

"We anticipate that our growth will be largely organic," Plummer said in an interview this week. "However, if we come across a technology that we feel is promising and that we would like to further develop, then we will certainly consider acquisitions."

Huawei brings in about US$400 million annually from U.S. sales, but it has run into opposition over infrastructure deals with big customers, let alone acquisitions of U.S. companies. Political pressure , according to some reports. Critics have accused the company of having ties to China's government and military, and raised the specter of "back doors" in Huawei networking products that make them vulnerable to Chinese intrusion. Huawei denies having those links.

The company would be better positioned to carry out future deals in the wake of the 3Leaf controversy, because negotiations with CFIUS on that deal led to an ongoing relationship with the agency, Plummer said. That relationship is specifically focused on dissolving the 3Leaf deal, Plummer said, clarifying made earlier this month by Huawei Group CTO Matt Bross, who said it involved oversight of all of Huawei's U.S. operations. But Plummer believes the ongoing process of divesting the 3Leaf assets will have broader benefits.