Following an intelligence report proposing products manufactured by Chinese firms ZTE and Huawei should be banned fin the U.S., California-based Cisco appears to be taking the first step by ending a sales partnership with ZTE.
The U.S. House Permanent Select Committee on Intelligence (HPSCI) spent nearly a year investigating both Chinese firms, which are now considered national security threats.
The committee recommended national security should zero in on manufacturers like these two companies.
Another report on Monday found Cisco Systems, Inc. conducted its own independent inquiry into allegations ZTE had sold the Cisco-branded networking hardware to Iran.
ZTE under fire
In July 2011, a parts supply list revealed a deal between ZTE and an unnamed Iranian telecommunications company to provide five Cisco-branded switches.
Such sales are a breach of international embargoes against Iran, and the deal soon caught the watchful eye of the FBI after ZTE's U.S. general counsel accused the parent company of attempting to cover up the deal and destroy evidence.
"ZTE is highly concerned with the matter and is communicating with Cisco," said David Dai Shu, a ZTE spokesperson, about Cisco most decision to jettison ZTE.
"At the same time, ZTE is actively cooperating with the U.S. government about the probe to Iran. We believe it will be properly addressed."
Cisco declined to comment on ZTE specifically, but CEO John Chambers said in a recent interview with Reuters that the company would not "tolerate any direct or indirect sales" to Iran.
"When that occurs, we step up and deal with it very firmly," Chambers said. "So I think you can assume that you will not see that happen again."
Meanwhile, Huawei released a statement regarding the draft of the HPSCI's report that's made the rounds, claiming it should be treated "no different from any start-up enterprises in Silicon Valley."
"The report conducted by the House Permanent Select Committee on Intelligence, which took 11 months to complete, failed to provide clear information or evidence to substantiate the legitimacy of the Committee's concerns," Huawei fired back.
"We had hoped to ensure that the investigation would be fact-based and objective in its review of our business activities and the global issue of cyber-security," the company added.
"However, despite our best effort, the Committee appears to have been committed to a predetermined outcome."
In closing, Huawei promised to uphold the same "upstanding record" the global Fortune 500 company has had for the past 25 years.
"Moving forward, we will continue to do the best we can to provide our customers with safe, convenient, and equal access to information and communications services."