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A buyer’s filing has shown Huawei Technologies plans to sell its undersea telecom cable business, in its first major asset sale since the United States ratcheted up accusations of the Chinese firm being a vehicle for espionage.
Hengtong Optic-Electric, an optical telecommunication network products company based in Jiangsu province, said in the filing to the Shanghai Stock Exchange that it signed a letter of intent with Huawei Technologies subsidiary Huawei Tech Investment on May 31 to buy its 51% stake in Huawei Marine Systems via cash and share issuance.
The filing did not disclose a price, and Huawei Technologies declined to provide immediate comment when contacted by Reuters.
The potential sale comes as Huawei’s main business of making and selling telecom network equipment and smartphones is under intense global scrutiny as the United States works to persuade allies that Huawei’s products pose a security risk.
Huawei has said it would not cooperate with any Chinese state request to access its systems for intelligence purposes. Even so, the US Commerce Department imposed a trade ban last month that threatens to significantly disrupt its supply chain.
In March, The Wall Street Journal cited US security officials as saying the suspected security risk extended to undersea cables built by Huawei Marine.
Undersea cables are the backbone of global Internet traffic. Huawei has been gaining share in the market dominated by US firm SubCom, Japan’s NEC and Europe’s Alcatel-Lucent, since Huawei Marine was established in 2008 as a joint venture with Britain’s Global Marine.