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Is Huawei Giving Up on the U.S.? Pretty Much

Broadband carrier Level 3 may soon opt for a U.S.-based supplier
A Huawei MediaPad tablet at the 2013 Mobile World Congress in Barcelona, Spain
A Huawei MediaPad tablet at the 2013 Mobile World Congress in Barcelona, SpainPhotograph by Simon Dawson/Bloomberg

Huawei Technologies has emerged as the world’s second-largest maker of networking gear thanks to growth in China, Europe, and emerging markets. The U.S. business is a different story. Just $1.3 billion of its estimated $35 billion in 2012 sales came from America. Now, amid rising congressional concerns about Chinese government-sanctioned hacking, Huawei may lose one of its most important stateside customers: Level 3 Communications, which runs a massive broadband network that helps carry traffic for most telecoms. JMP Securities analyst Erik Suppiger estimates that the Broomfield (Colo.)-based carrier has bought $200 million in optical networking gear from Huawei since 2009. It’s soliciting bids for its next three-year order, and Huawei isn’t likely to win, say two people who have spoken with Level 3 about its intentions but weren’t authorized to discuss them publicly. “There’s no way Level 3 will possibly select Huawei,” says Andrew Schmitt, an analyst for Infonetics Research.

Until recently, Level 3 has managed to keep its use of Huawei gear out of the spotlight, possibly because it only sells services to other networks. The company has never confirmed its use of the equipment; the only public evidence of it is an analyst report written at the time of the Huawei deal in 2009. Level 3 spokesman Jon Paul McLeary declined to comment.