Cisco cuts ties to China's ZTE after Iran Sales

Cisco Systems Inc. has ended a longstanding sales partnership with ZTE Corp after an internal investigation into allegations that the Chinese telecommunications equipment maker sold Cisco networking gear to Iran, Reuters reports. 

That news comes as the The U.S. House intelligence committee is releasing a report that raises national security questions about Huawei, the Chinese firm that many say the the largest telecommunications equipment supplier in the world, with sizable share of the market for fourth generation networks.

The report does not have immediate consequences for private sector purchases of Huawei gear, but could point to future issues, especially if U.S. government agencies are barred from buying Huawei equipment. Those rules will tend to migrate to state purchases as well, and all of that could lead to pressure on leading U.S. telecom firms not to use Huawei gear. 

Committee chairman Mike Rogers (R., Mich.) said U.S. telecommunications networks would be at risk of cyber attacks if Huawei gear were used. "We simply cannot trust such vital systems to companies with known ties to the Chinese state," Rogers said. 

Huawei executives deny the charges. 

The House intelligence committee has conducted a year-long investigation of potential national security threats posed by Huawei and ZTE.

Huawei is now the world's second-largest provider of telecommunications equipment, and it does 70% of its business outside China.

The report also recommends that the U.S. government avoid using equipment from the firms, and that U.S. companies seek alternative vendors for telecommunications equipment.

Both moves suggest growing unease about ties between the two Chinese firms and the Chinese government.