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  1. ITV Report

Huawei defends security record as annual sales top $100 billion

Chinese tech giant Huawei annual profits exceeded $100 billion (£76.6 billion) in 2018 for the first time as it continues to face growing scrutiny and security concerns ahead of its planned 5G rollout.

The company's deputy chairman defended the company’s commitment to security as he announced the annual results after a stinging British Government report added to Western pressure.

Guo Ping claimed the British government had put Huawei under greater scrutiny because it was a Chinese company and accused the US of acting unlawfully in its boycott of the company.

Huawei passed Apple last year as the number two global smartphone brand behind Samsung and earlier passed Ericsson as the number one network gear seller.

Chinese officials and some industry analysts have suggested the Trump administration might be exaggerating security concerns to hinder a competitor to US tech brands.

During a press conference to announce the company's annual report, Chairman Guo said the US Government had a "loser's attitude", calling the US "sore" because the most powerful country in the world cannot compete with Huawei in this technology domain

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Britain’s National Cyber Security Centre added criticism on a different front on Thursday, accusing the company of failing to repair dangerous flaws in its telecom technology and of having “poor software engineering”.

Accusations that Huawei, China’s first global tech brand, might facilitate Beijing’s spying threaten to hamper its access to global carriers that are preparing to invest billions of dollars in next-generation technology.

The National Cyber Security Centre's report said British researchers saw nothing that pointed to Chinese government interference, but did say Huawei had not repaired flaws that might make its systems vulnerable to cyber attacks.

Mr Guo did not respond directly to the British report’s criticisms but said Huawei will work with regulators to improve security.

  • Video report by ITV News Asia Correspondent Debi Edward

He noted the company has promised to invest US$2 billion (£1.53 billion) over five years to improve its software engineering and expressed confidence British regulators will “increase their confidence” in Huawei over time.

“We prioritise cybersecurity and privacy protection even above our commercial targets,” Mr Guo said at a news conference. He said the British report showed Huawei products had no “backdoors” to permit eavesdropping.

Huawei is a global leader in developing fifth-generation, or 5G, telecoms. The technology is intended to vastly expand mobile networks to support self-driving cars, medical devices and factory equipment, but that makes it more politically sensitive.

Huawei is at the centre of US-Chinese tensions over technology and accusations of cyber-spying and violating trade sanctions on Iran.

The company’s chief financial officer was arrested in December in Canada on US charges of lying to banks about dealings with Iran. Beijing has detained two Canadians and blocked imports of canola from Canada in what is widely seen as an attempt to compel her release.

Huawei rotating chairman Guo Ping speaks as he releases the Huawei's annual report on March 29. Credit: AP

Huawei’s US market evaporated after a 2012 congressional report labelled the company a security threat, but sales elsewhere grew rapidly.

Australia, Japan and Taiwan have imposed curbs on use of Huawei technology, but Germany, France and other governments have resisted US demands to exclude it from 5G networks. Carriers complain that would reduce competition, raise prices and delay the rollout of 5G services.

Huawei has opened testing centres in Britain, Germany and Belgium for regulators to examine its products.

“We welcome the European Union’s attitude,” said Mr Guo. “They do not discriminate against vendors from any country.”

Huawei’s founder, Ren Zhengfei, told reporters earlier this year the latest US criticism had yet to hurt sales. But Mr Guo said on Friday the company has to spend more time talking to potential customers “to address their concerns”.

Despite that, Huawei’s sales last year rose 19.5% over 2017. That was driven by double-digit gains for its consumer and enterprise units, while sales of network gear to phone and internet carriers were unchanged at 62.3 billion US dollars.

Profit rose 25.1% to 8.6 billion US dollars (£6.6 billion)

Mr Guo blamed weak network gear sales on a temporary lull in investment by carriers. He expressed confidence 5G sales will take off this year.