Stocks were hit just after 3:30pm when the WSJ reported that Federal prosecutors are pursuing a criminal investigation of China’s Huawei Technologies – whose CFO was arrested late last year and is pending extradition to the US – for allegedly stealing trade secrets from U.S. business partners, “including the technology behind a robotic device called “Tappy” that T-Mobile US Inc. used to test smartphones.”
While the news dented stock prices, the impact was far less notable than it would have been had the news hit late last year when any turmoil in US-China relations would instantly vaporize 20 or more points from the S&P; in fact the market’s resilience in light of the report which is sure to aggravate any US-China trade negotiations, is perhaps the most remarkable observation.
As the WSJ reports, the criminal investigation grew in part out of civil lawsuits against Huawei, “including one in which a Seattle jury found Huawei liable for misappropriating robotic technology from T-Mobile’s.”
The probe is said to be at an advanced stage and could lead to an indictment soon.
While Huawei declined to comment, the company previously contested the T-Mobile case, but conceded that two employees acted improperly.
The federal investigation puts added pressure on the Chinese technology giant, the world’s largest maker of telecommunications equipment and the No. 2 maker of smartphones worldwide. It comes amid a broader push by the Trump administration to aggressively pursue claims of intellectual property theft and technology transfer by Chinese companies.
While Huawei has repeatedly denied that it is a security threat, saying it is owned by its employees and operates independently of the Beijing government, the company has long been under scrutiny by the U.S., which has effectively blocked the Chinese telecom company from installing its equipment in major U.S. networks because of concerns that its gear could be used to spy on Americans.
U.S. pressure on Huawei has been building, culminating last month when Canadian authorities arrested Huawei CFO Meng Wanzhou at the request of U.S. authorities. Meng, the daughter of company founder Ren Zhengfei, was accused of misleading banks about the nature of Huawei’s business in Iran, leading to violations of U.S. sanctions on the country; she has denied the charges, and Huawei says it follows the law in all countries where it operates.
In a more recent development, Polish authorities last week arrested Huawei executive Wang Weijing and charged him with conducting espionage on behalf of the Chinese government. Huawei wasn’t accused of wrongdoing, and the company on Saturday terminated Wang’s employment.
via RSS http://bit.ly/2SWSO8b Tyler Durden