The U.S.-expansion hopes of Huawei and ZTE Corp. were dealt a harsh blow on Monday with the publication of a House Intelligence Committee report that urges U.S. telecom firms to avoid doing business with the two Chinese equipment vendors. Based on the results of a year-long investigation that included interviews with current and former employees of Huawei and ZTE, and the testimony of Huawei and ZTE executives before a committee hearing last month, the report concludes “that the risks associated with Huawei’s and ZTE’s provision of equipment to U.S. critical infrastructure could undermine core national U.S. security interests.” Boasting operations in more than 140 countries, Huawei surpassed Ericsson of Sweden earlier this year as the world’s largest supplier of telecom equipment by sales. ZTE, meanwhile, has emerged as the world’s fourth largest producer of mobile handsets with more than 900,000 employees worldwide. Both companies, however, have come under fire in the U.S. for their alleged ties to the Chinese government. Asserting that “China has the means, opportunity and motive to use telecommunications companies for malicious purposes,” the report recommends that (1) the congressional Committee on Foreign Investments in the U.S. block mergers between Huawei/ZTE and U.S. entities, (2) U.S. government agencies refrain from using or procuring equipment from Huawei/ZTE, and (3) private U.S. entities seek alternate vendors for telecom equipment. The report further contends that, in testimony offered to Congress last month, “neither company was willing to provide sufficient evidence to ameliorate the committee’s concerns.” Declaring, “we simply cannot trust such vital [telecommunications] systems to companies with known ties to the Chinese state,” House Intelligence Committee Chairman Mike Rogers (R-MI) affirmed that the committee would report its findings to the Department of Homeland Security and the Justice Department for further investigation. Dismissing the report as “baseless,” William Plummer, a U.S.-based executive of Huawei, vigorously defended Huawei as “a globally trusted and respected company” that “unequivocally denies the allegations.” Proclaiming, “ZTE equipment is safe,” David Dai Shu, the director of global public affairs for ZTE, emphasized that ZTE “has set an unprecedented standard for cooperation by any Chinese company with a congressional investigation.”