Huawei’s smartphone deal with AT&T collapses

US carrier abandons planned partnership due to political pressure

HONG KONG: Huawei Technologies Co Ltd’s planned deal with US carrier AT&T Inc to sell its smartphones in the United States has collapsed at the 11th hour because of security concerns, people with knowledge of the matter said, in a blow to the Chinese firm’s global ambitions.

AT&T was pressured to drop the deal after members of the US Senate and House intelligence committees sent a letter on Dec 20 to the US Federal Communications Commission (FCC) citing concerns about Huawei’s plans to launch consumer products through a major US telecom carrier.

The letter to FCC chairman Ajit Pai, which was signed by 18 lawmakers, noted concerns about Chinese companies in the US telecommunications industry.

The letter notes the committee’s concerns “about Chinese espionage in general, and Huawei’s role in that espionage in particular.” A copy of the letter was seen by Reuters.

Huawei said in a statement on Tuesday that its flagship smartphone Mate 10 Pro – Huawei’s challenger to the iPhone – would be sold in the United States only through open channels.

“The US market presents unique challenges for Huawei, and while the HUAWEI Mate 10 Pro will not be sold by US carriers, we remain committed to this market now and in the future,” it said.

Huawei’s Washington-based spokesman William Plummer said on Tuesday that “privacy and security are always our first priority.”

“We are compliant with the world’s most stringent privacy protection frameworks and requirements and have gained the trust of over 150 million customers in the past year alone,” Plummer said in an e-mail.

Huawei is the world’s third-largest smartphone vendor by volume after Samsung Electronics and Apple Inc, but it has a mere 0.5% share of the US smartphone market, compared with 39% for Apple and 18% for Samsung, according to industry tracker Canalys.

Washington began to have concerns about Chinese investment in the United States before President Donald Trump took office last year, and those concerns have heightened.

Because of this skepticism, including the US government’s rejection of several Chinese deals, Chinese investment in the United States fell to US$25bil last year from US$50bil in 2016, according to Derek Scissors, a China expert at the American Enterprise Institute.