While it may be allowed to sell devices in the US, Huawei's application to build a wireless network specifically for first responders (like police and firefighters) has been denied, apparently due to the Pentagon's concerns that Huawei has strong ties to the People's Liberation Army of China. This remains unconfirmed; US Commerce Department spokesman Kevin Griffis confirmed that Huawei's bid to build this LTE network was passed over "due to US government national-security concerns" but did not elaborate further. However, a source told The Daily Beast that the government's main concern is Huawei's hardware being bugged to give China's government visibility into the network.
This isn't the first time the China-based telecom giant has had potential business blocked by the US government. In 2010, under pressure from the National Security Agency, Sprint denied Huawei's bid to build out Sprint's 4G network. And in 2008 the Treasury Department blocked a sale of US software maker 3com to Huawei — again, on national security grounds.
Unsurprisingly, Huawei finds these claims "utterly capricious" and noted this decision "could have a chilling effect on our greater US business." Despite its major investment in the US (the company opened a new headquarters in Texas in 2010, and U.S. R&D investments were over $100 million in 2010), Huawei's chances of getting government work seem slim.