* Huawei would be logical buyer for Nortel unit, but concerns would be raised
Should the United States continue to avoid network equipment made by manufacturers based in China? That’s a question raised by a recent Forbes story that points out that while China-based Huawei Technologies is likely to be interested in buying a Nortel business unit, such a move would raise national-security concerns here.
Huawei has been looking for opportunities to expand, via networking companies that could use a lift. You may remember the failed attempt, along with Bain Capital Partners, to acquire 3Com last year. The resistance at the time was that 3Com makes equipment that is used specifically by the U.S. government for security applications.
Nortel has been public about the fact that it has been looking to shed its Metro Ethernet Networks business unit for months, in an effort to raise much-needed cash.
For these reasons, a Huawei-Nortel pairing seems to make sense. But the Forbes article points out that major carriers such as Verizon, Sprint, Qwest and AT&T use Nortel equipment, and they carry U.S. government traffic. The story indicates industry analysts believe that those customers would walk away from Nortel if it were owned by Huawei, on the suspicion that the China-based company would somehow create a back door in the equipment that would give the Chinese military direct access to U.S. government communications.
Is this a valid concern? Corporations are global. Parts of network equipment are manufactured in far-flung areas of the world. And the idea that an undetectable back door could be created seems far-fetched. What do you think?
