Chinese mobile makers pose a threat to national security and should be banned from the US, says the US House of Representatives' Intelligence Committee.
Apparently companies like Huawei and ZTE pose an espionage threat. The committee also accuses them of bribery, corruption, discriminatory behaviour and copyright infringement.
It assumes any company dominating the smartphone market will also take control of electric power grids, banking and finance systems, gas, oil and water systems, and rail and shipping.
According to a draft of the report, due to be released later today, US intelligence should focus on the influence of Chinese mobile manufacturers.
The Intelligence Committee carried out an 11-month investigation of Huawei and ZTE.
Both companies are big players, and growing fast in the West. Huawei is the world's second-biggest maker of routers, switches and telecoms equipment by revenue. ZTE is fifth. In terms of mobiles, ZTE is fourth globally, while Huawei is sixth.
Huawei denied the committee's allegations.
"Baseless suggestions otherwise or purporting that Huawei is somehow uniquely vulnerable to cyber mischief ignore technical and commercial realities, recklessly threaten American jobs and innovation, do nothing to protect national security, and should be exposed as dangerous political distractions from legitimate public-private initiatives to address what are global and industry-wide cyber challenges," said spokesman William Plummer in a statement.
ZTE also said it "profoundly disagrees" with the claim it is controlled by the Chinese government.
The US panel claims Huawei and ZTE failed to hand over requested documents.
According to panel chairman Mike Rogers, US companies thinking about buying from Huawei should "find another vendor if you care about your intellectual property; if you care about your consumers' privacy and you care about the national security of the United States of America."
The committee will hold a press conference today at 2pm UK time to share its report.