Huawei's hopes that AT&T would sell its smartphones in the United States have been dashed.
The Chinese tech firm was trying to clinch its first partnership with a major U.S. mobile carrier, but the talks "fizzled out at the last minute," according to a person familiar with the matter.
Huawei has struggled to make a meaningful entry into the U.S., partly because of official concerns that its technology could be used by the Chinese government to gather intelligence -- allegations Huawei has repeatedly denied.
Deals between smartphone makers and wireless carriers fall through on occasion for a variety of reasons, and it was not immediately clear what caused the talks with AT&T to fail.
They had not been publicly confirmed but were reported by The Information and Bloomberg last year.
The collapse of the talks -- first reported by The Wall Street Journal -- comes at an awkward time for Huawei.
"We have been harmed again," Richard Yu, head of Huawei's consumer business, was quoted as saying by the South China Morning Post.
Yu is expected to announce Tuesday at the Consumer Electronics Show in Las Vegas that the company's latest high-end smartphone will go on sale in the U.S.
The phone, the Mate 10 Pro, sells for about $800 in China, where it is a direct competitor to the iPhone X.
A deal with AT&T would have helped boost sales of the splashy new device. Having the backing of a major wireless carrier is key to making inroads in the U.S.
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"The U.S. market presents unique challenges for Huawei, and while the Huawei Mate 10 Pro will not be sold by U.S. carriers, we remain committed to this market now and in the future," Huawei said in a statement. "U.S. customers need a better choice, and as a leader in technology and innovation, Huawei is prepared to fill this need."
AT&T declined to comment.
It is battling in court to save its $85 billion deal to buy CNN's parent company, Time Warner (TWX). The Department of Justice has filed a lawsuit to block the takeover.
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Huawei is the world's third largest smartphone maker behind Samsung (SSNLF)and Apple (AAPL). It is also a leading provider of telecom equipment in Asia, Europe and Latin America.
But the U.S. market has proved to be a tough one to crack.
Huawei's telecom networks business remains effectively shut out from selling equipment to big American telecom companies after Congress issued a critical report in 2012. Lawmakers suggested that Huawei equipment could pose a threat to national security -- allegations that the Chinese company described as "baseless."
As for smartphones, Huawei already outsells both Apple and Samsung in its home market of China. It also makes the second most popular Android phone in France, Italy, Germany, and Spain, according to Kantar Worldpanel.
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But Huawei has less than 1% of the U.S. smartphone market, according to the research firm.
Currently, U.S. consumers have to buy Huawei's smartphones without a wireless plan at Walmart (WMT) or Best Buy (BBY).
In an interview with CNN last February, Yu said the company wanted to become the world's number one smartphone maker in the next five years. Lack of progress in the world's largest economy will make that much harder to achieve.
