Now, it's being reported that Huawei is currently under criminal investigation for its business dealings with Iran. This news was first reported by The Wall Street Journal, and it is unknown how far along the U.S. Justice Department is in its investigation. However, if it is found that Huawei did violate the law, its already tenuous place in the U.S. smartphone and telecom market could be dealt a death blow.
Whatever the outcome of the investigation, it might not matter much to Huawei. The company has signaled that it may be backing away from the U.S. market to focus on its strengths in other areas around the globe. The company has already laid of a number of its American employees and sidelined its Washington lobbyist.
“Some things cannot change their course according to our wishes,” said Huawei deputy chairman Eric Xu during a gathering with analysts. “With some things, when you let them go, you actually feel more at ease.”
Huawei's recent troubles come at a time when Chinese rival ZTE has also been bombarded with sanctions by the U.S. government for illegally selling equipment to Iran and North Korea. In addition to a $1.2 billion penalty levied by the U.S. government, the company has also been banned from purchasing components from U.S. companies for a period of 7 years. This effectively kills its operations in the U.S., as ZTE relies heavily on Qualcomm processors for its smartphones.
A Chinese regulator actually lambasted ZTE for its transgressions, calling the company "stupid and passive". China's State-owned Assets Supervision and Administration Commission (SASAC) said that the company had taken "risks to engage in illegal operations numerous times" and that "our country’s diplomatic layout and image will inevitably be affected" due to its actions.