The past few months have been difficult for Chinese smartphone OEMs, particularly ZTE and Huawei. ZTE nearly shut down after the U.S. government placed a trade ban on the company, which was finally lifted last month. Earlier this year, AT&T and Verizon reportedly dropped plans to sell the Huawei Mate 10 Pro due to pressure from the federal government. Now both companies are under fire again, as U.S. agencies are now banned from using their telecommunications technology.
If you're not familiar with it, the National Defense Authorization Act acts as the annual budget for the U.S. Department of Defense. A bipartisan group of lawmakers attempted to add a provision in the bill that permanently banned ZTE from importing US tech, but that part wasn't in the final version. However, there is a section in the NDAA that bans government agencies from using certain components or services from a handful of Chinese companies:
(3) COVERED TELECOMMUNICATIONS EQUIPMENT OR SERVICES.—The term “covered telecommunications equipment or services” means any of the following:
(A) Telecommunications equipment produced by Huawei Technologies Company or ZTE Corporation (or any subsidiary or affiliate of such entities).
(B) For the purpose of public safety, security of government facilities, physical security surveillance of critical infrastructure, and other national security purposes, video surveillance and telecommunications equipment produced by Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, or Dahua Technology Company (or any subsidiary or affiliate of such entities).
(C) Telecommunications or video surveillance services provided by such entities or using such equipment.
(D) Telecommunications or video surveillance equipment or services produced or provided by an entity that the Secretary of Defense, in consultation with the Director of the National Intelligence or the Director of the Federal Bureau of Investigation, reasonably believes to be an entity owned or controlled by, or otherwise connected to, the government of a covered foreign country.
The term "telecommunications equipment" almost certainly includes smartphones, but mainly refers to hardware like routers and modems. The NDAA, which was signed into law today, also allocates funding to companies that need to replace the newly-banned equipment.
Huawei provided 9to5Google with the following statement:
Huawei supports the US government’s goals for better security, but this random addition to the NDAA is ineffective, misguided, and unconstitutional. It does nothing to identify real security risks or improve supply chain security, and will only serve to stifle innovation while increasing internet costs for US consumers and businesses. We believe that the American people deserve equal access to the best possible connections and smart device options, and will keep working to make this happen.