The companies in question are Huawei, the third-largest phone manufacturer in the world after Samsung and Apple, and ZTE. Australia's DoD announced Wednesday that they've stopped using Huawei phones and are phasing out the ZTEs as they fail.
"Defen[s]e has a quantity of aging ZTE mobile phones in service that are used for unclassified voice and text purposes. Existing ZTE mobile phones, when they fail, are being replaced with an alternate unclassified voice and text mobile handset," a spokesperson told Business Insider on Wednesday.
However, they added that they conducted a risk assessment and "deemed that these mobile phones do not pose a security risk for Defence."
Huawei has tried to become the Chinese answer to the American tech giants that dominate the global smartphone market, but they've run into obstacles. Australia forbade Huawei from working on Australia's National Broadband Network after their national security agency, the Australian Security Intelligence Organization (ASIO), advised against it.
Although nations like Canada, India and the UK have expressed suspicions of Huawei before, the most recent thrust against them has been led by the United States. During much-touted testimony before the US Senate Intelligence Committee (SIC) in mid-February, the leaders of the US intelligence agencies warned against the purchase of Huawei and ZTE phones.
"We're deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don't share our values to gain positions of power inside our telecommunications networks," FBI Director Chris Wray told the SIC.
"That provides the capacity to exert pressure or control over our telecommunications infrastructure. It provides the capacity to maliciously modify or steal information. And it provides the capacity to conduct undetected espionage," he continued.
The long arm of Washington was felt in both Canberra and Beijing. Huawei was also in talks to develop a new phone network, but on Monday the Home Affairs Department announced that they would conduct a full national security assessment before they allowed Huawei to be involved.
This came after Australian Prime Minister Malcolm Turnbull was reportedly briefed by the heads of the US National Security Agency and Department of Homeland Security over their concerns about the phone network.
Huawei was nonplussed and blamed the exclusion on their American tech rivals — many of whom are major lobbyists on Capitol Hill. "Some people, some of our competitors, are using political ways to try and kick us out of the US market — they can't compete with us on the technology and innovation so they compete with us on the politics," Richard Yu, head of Huawei's consumer business department, said in a Sunday press release. "We're independent from any country, any government. We're not involved in politics."
Huawei refer to themselves as a "collective" but are a de facto private company under the leadership of billionaire Ren Zhengfei. The company has enjoyed large amounts of support from Beijing, allowing them to lead the pack of Chinese telecommunications companies.
ZTE, a smaller organization but still a major player in the Chinese smartphone market, is a public company. The largest chunk of shares are held by ZTE Holdings, an intermediary that includes several state-owned enterprises.