China's Huawei Technologies Co Ltd suffered a major setback on Tuesday when its U.S. partner AT&T Inc reportedly dropped a deal to sell the company's smartphones at the last minute under political pressure from U.S. lawmakers.
AT&T, the No. 2 U.S. wireless carrier, was pressured to abort the deal after members of the U.S. Senate and House intelligence committees expressed concern in a letter to the Federal Communications Commission on Dec 20, according to online tech news site The Information.
Huawei, a private company based in Shenzhen in South China, has long been a target of U.S. politicians.
In October 2012, a House Intelligence Committee report accused Huawei and ZTE, the two largest telecom-equipment manufacturers in China, of posing a national security threat, without providing solid evidence.
The end of the deal means that Huawei, the world's third-largest smartphone vendor after Apple and Samsung, will not be able to sell its latest Mate 10 products via a telecom carrier but only through open channels, thereby greatly limiting its market access.
On Tuesday, Huawei unveiled its Mate 10 Pro at CES 2018 in Las Vegas.
"We've experienced unprecedented growth worldwide and are now bringing our award-winning products to the U.S.," said Richard Yu, CEO of the Huawei Consumer Business Group.
"Huawei is and has been in the U.S. and is part of a community of visionaries that strive to push boundaries and improve daily lives through technology. Our newest consumer solution, the Huawei Mate 10 Pro, is the smartphone that U.S. consumers need and deserve."
As for the scuttling of the deal with AT&T, Yu said "we are still very confident in the U.S. market. Huawei has already made lots of progress in markets like Europe, Korea and Japan, so we believe we will also make a breakthrough in the U.S. in the future because consumers love our products."
The Mate 10 Pro, equipped with Huawei's own AI-powered chips and first launched in Europe in October, is regarded as a premium handset that rivals Apple and Samsung's best products.
The phone is priced at 9 and features a 6-inch QHD OLED screen, the AI-infused Kirin 970 processor, and Android Oreo operating system, with the ability to reach gigabit LTE speeds, a Leica-branded 12-megapixel dual camera, and a 4,000mAh battery.
"Huawei's goods and services are proven and trusted across 170 markets globally, including by virtually every major carrier in every OECD and NATO market," said Ted Moran, a professor at Georgetown University and a non-resident senior fellow at the Peterson Institute for International Economics.
"The suggestion that use of Huawei products might present some kind of unique vulnerabilities because Huawei is a Chinese company does not make sense in a world in which all IT goods and services - regardless of the location of the vendor's headquarters - are developed and produced globally," said Moran, who is a member of the Huawei International Advisory Council.
Neil Mawston, executive director of the global wireless practice at Strategy Analytics in the UK, said that some U.S. authorities worry that selling more Chinese smartphones or networks could give the Chinese government back-door access to sensitive data on location, voice calls or daily activities of American citizens.
He said that Huawei is a toptier global smartphone player, and it would be a surprise if Huawei were not in some kind of talks with all the major U.S. operators. "Whether those talks actually go anywhere is another matter," he said.