Published: Mon, April 16, 2018
Worldwide | By Isabel Fisher

United States bans American companies from selling to Chinese phone maker ZTE

United States bans American companies from selling to Chinese phone maker ZTE

It has relied on US companies including Qualcomm Inc, Microsoft Corp and Intel Corp for components.

This time past year, Chinese electronics giant ZTE pled guilty to violating sanctions on Iran and North Korea. It also paid $890 million in fines.

The action today stems from an fine imposed on ZTE one year ago, March 23rd, that totaled $1.1 billion - a record, the Department said - after the USA determined the company engaged in "a multi-year conspiracy to violate the US trade embargo against Iran to obtain contracts to supply, build, operate, and maintain telecommunications networks in Iran using USA -origin equjpment, and also illegally shipping telecommunications". For starters, it prevents the ZTE from buying hardware components from companies like Qualcomm and Intel. While the company went ahead with the launch, there is no announcement about the AT&T partnership. ZTE admitted last month that it had taken no action against the 35 employees in question. Acacia Communications Inc. shares fell by 34.7%, a drop influenced by the fact that almost a third of the company's 2017 revenue came from ZTE.

"ZTE made false statements to the US Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation", said Secretary of Commerce Wilbur Ross Jr.

ZTE officials did not immediately respond to requests for comment.

"ZTE misled the Department of Commerce.Instead of reprimanding ZTE staff and senior management, ZTE rewarded them.This egregious behaviour can not be ignored", Ross said.

"This will be devastating to the company, given their reliance on USA products and software", said Jacobson. The majority of the ZTE smartphones in the USA are sold by the carriers.

The U.S. action against ZTE is likely to further exacerbate current tensions between Washington and Beijing over trade.

The news comes after ZTE a year ago pled guilty in federal court to subvert US sanctions in Iran.

It has now come out that ZTE did not follow through on these actions.

Allowing Huawei, ZTE, and other related entities access to US government communications would be inviting Chinese surveillance into all aspects of our lives.

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