A telecom hardware company founded by ex-Huawei executives in China is under investigation by the U.S. Commerce Department and FBI due to potential security risks. Baicells Technologies, established in 2014, expanded to the U.S. the following year and has supplied equipment for over 700 mobile networks nationwide. The Commerce Department has issued subpoenas to the company, citing national security concerns, while the FBI’s interest in the firm’s equipment and Chinese background goes back to 2019. Although the specifics of these probes remain unclear, the Federal Communications Commission is assisting in the review. Baicells’ chairman has stated that the company will fully cooperate with U.S. government inquiries, denying any security risks associated with its products. The investigations highlight lingering suspicions in Washington about Beijing possibly using telecoms gear for espionage, as seen with Huawei and ZTE. The Pentagon recently included Baicells in a list of companies purportedly linked to China’s military, a move the company intends to challenge. Concerns persist about China’s ability to access sensitive data through telecoms networks, emphasizing the importance of cybersecurity measures.
Around the globe, a notable Chinese group known as “Volt Typhoon” has caught the attention of U.S. officials. Correspondence from an FBI intelligence analyst and sources reveal that federal agents engaged with a Baicells customer, the city of Las Vegas, in 2023 to caution them about their base stations. The FBI’s interest in Baicells products dates back to at least 2019. In that year, federal authorities approached wireless internet service provider KGI Communications after the installation of Baicells base stations in King George, Virginia, close to the Naval Surface Warfare Center Dahlgren Division where hypersonic weapons are tested. Former county supervisor Ruby Brabo and KGI employee Juan Marte recounted the incident. Marte, KGI’s previous CEO, confirmed that FBI agents had cautioned KGI about Baicells’ Chinese roots. When reached for comment, the Navy directed Reuters to the FBI, mentioning an “open investigation” into the issue.
In 2023, FBI officials visited the chief technology officer of Las Vegas following the city’s agreement to increase their Baicells base stations by 82 units. Informants familiar with the situation informed Reuters that the officials raised security worries and asked to remove one of the base stations. A document reveals an email from an FBI counterintelligence division intelligence analyst in May 2023 requesting updates on any removal or replacement actions. Concerned by the FBI’s attention – which ultimately resulted in the removal of a base station, as per an insider – Las Vegas terminated the contract and shifted to a U.S. supplier. Notably, the FBI’s inquiries regarding Baicells in Virginia and Las Vegas have not been previously disclosed.
In 2021, two FBI agents from Dallas interviewed Patrick Leary, a former co-CEO of Baicells North America, focusing on national security and China-related concerns. Meanwhile, the U.S. Cyber defense agency CISA issued a warning in 2023 about a vulnerability in Baicells Nova base stations that could be exploited by hackers. An analysis by Censys in September showed a significant number of Baicells base stations in the U.S. still using susceptible firmware, posing potential risks of hijacking.
Baicells responded by stating they have taken steps to ensure product security and address any concerns promptly. Security expert Terry Dunlap highlighted the risks associated with such vulnerabilities, emphasizing the potential for cyber attacks. CISA has issued advisories and notices since 2022 regarding the vulnerabilities of Baicells’ routers and base stations, particularly in critical infrastructure networks such as water, energy, financial services, and telecommunications.
“Critical Five” as “essential”. FLEE FROM CHINA? Baicells’ original Chinese parent, Beijing Baicells Technologies Co., was established in 2014 by Sun, a former top employee of Huawei, along with senior Huawei veterans Scott Liang Xingang, Zhou Mingyu, and Ding Yingzhe. Liang and Ding have since departed. They did not respond to requests for comment. They are part of approximately 60 former Huawei employees who later joined Baicells, as per a Reuters review of profiles on LinkedIn and the Chinese equivalent MaiMai. Reuters could not independently verify these figures. In 2016, Baicells established an office in Plano, a suburb of Dallas, where Huawei’s American R&D arm Futurewei was located. Sun stated to Reuters that Baicells has never engaged in any business dealings with Huawei, and the portion of current staff from the company is a small fraction of its total workforce. Since 2019, the U.S. has limited Huawei’s access to American technology, alleging activities against U.S. national security, a claim Huawei refutes. Huawei declined to comment. Based on Texas filings and a press release, Baicells ceased to be part of its Chinese parent by 2019. However, Baicells’ Chinese website still lists its headquarters in Beijing’s Haidian District, with a subsidiary in Dallas. Four former employees familiar with Baicells’ Chinese leadership state that the U.S. company is currently managed from China. One individual, who was not authorized to speak publicly, mentioned that a recent former CEO of the U.S. branch, Minchul Ho, was closely overseen by the Chinese board, requiring approval for all suggestions. Ho and Baicells did not respond to requests for comment on this claim. To address U.S. customer apprehensions regarding Baicells’ Chinese connections, sales representatives have been advised in recent years to state that the equipment is manufactured in Taiwan, as per four former employees. Shipping documents obtained from a commercial customs data provider reveal that 92% of Baicells equipment shipments to the U.S. between 2018 and July 2024 originated from China or Hong Kong, with the remaining from Taiwan. It could not be confirmed by Reuters where the equipment was manufactured. “We recognize our Chinese origins and understand this is a significant concern for federal funding,” stated Erik Randall, a Baicells sales executive, in a January 2023 webinar for potential clients posted on YouTube. “Our infrastructure is actually being constructed in Taiwan, so we are gradually moving away from the Chinese culture that concerns everyone in North America.” (Reporting by Alexandra Alper in Washington; Additional reporting by Eduardo Baptista in Beijing, David Shepardson, Chris Bing, Idrees Ali, and Raphael Satter in Washington, James Pearson in London, Joshua Schneyer, and Karen Freifeld in New York; Editing by Chris Sanders and David Clarke)
