Huawei said it would suffer "significant damage" to its brand and its reputation if it was forced to go back on the $2 million deal last May in which it acquired computer firm 3Leaf Systems, the Financial Times reported.

The report cited Huawei as saying that the decision not to back down means Obama himself must decide whether the firm must reverse the deal, the newspaper said, calling it a "highly unusual move".

AFP was not immediately able to reach Huawei officials who would comment.

The report cited experts as saying that Huawei's decision to resist the advice of the US Committee on Foreign Investment, which vets deals on security grounds, was "virtually unprecedented" and in most cases when companies are quietly advised to walk away from such a deal, they have done so.

The move puts Obama in a difficult position after last month's state visit by Chinese President Hu Jintao to the United States. US officials have also been lobbying Beijing to give US tech firms greater market access.

But lawyers said Obama, who has 15 days to make a decision, was likely to uphold the decision by the Committee on Foreign Investment, the report said.

Huawei, founded 23 years ago by Ren Zhengfei, a former People's Liberation Army engineer, is at the forefront of Chinese companies' efforts to shift from being the world's workshop to becoming creators of genuine global brands.

Its consumer products include smart phones that run on Google's Android platform and technology to connect laptops to the Internet using 3G networks.

Huawei's technology is also used to build mobile phone networks around the world.

Huawei has long rejected claims that it has ties to the Chinese military. It says it is owned by its employees and that Ren, its chief executive, has less than a two percent stake in the company.

However, in a letter to Commerce Secretary Gary Locke and Treasury Secretary Timothy Geithner, a group of top lawmakers accused Huawei of having "ties with the People's Liberation Army, the Taliban, and the Iranian Revolutionary Guard."

3Leaf makes software that allows computer resources to be reallocated according to a user's needs across a computer network.

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