US Government Crushes ZTE With Ban on US Companies Providing It Components

The equipment ZTE sells to carriers is the subject of a proposed action by the FCC to deny funding from the Universal Service Fund to USA carriers that use ZTE equipment as well as equipment from Huawei.

The UK's National Cyber Security Centre, which is part of intelligence agency GCHQ, is warning that nation's telecommunications sector to avoid ZTE equipment.

In March 2017, ZTE agreed to a combined civil and criminal penalty and forfeiture of $1.19 billion after illegally shipping telecommunications equipment to Iran and North Korea, making false statements, and obstructing justice including through preventing disclosure to and affirmatively misleading the U.S. Government.

The FT's report notes that Levy's letter also cites a recent settlement between ZTE and USA officials, in which the Chinese firm agreed to pay a $1.2bn fines for violating United States sanctions on North Korea and Iran.

The Chinese Commerce Ministry said today it hoped Washington would treat ZTE Corp. fairly after US authorities concluded it paid bonuses to employees involved in a scheme to ship equipment to North Korea and Iran instead of disciplining them as it promised in 2017.

The U.S. Department of Commerce is banning American companies from selling components to leading Chinese telecom equipment maker ZTE for seven years.

On the consumer devices side ZTE makes heavy reliance on Qualcomm SoCs to power their smartphone products.

ZTE said in a brief statement Tuesday that it is aware of the USA ban.

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ZTE responded on Tuesday morning by saying that "the company is assessing the full range of potential implications that this event will have on the company and is proactively communicating with the relevant parties in order to respond accordingly", reports Global Times.

The U.K.'s national Cyber Security Centre warns the telecommunication companies of the country that, "National risks from ZTE equipment and services can not be mitigated". President Donald Trump threatened tariffs on $150 billion in Chinese imports for alleged violations of intellectual property rights, while Beijing vowed to retaliate on everything from American soybeans to planes.

"Instead of reprimanding ZTE staff and senior management, ZTE rewarded them", Commerce Secretary Wilbur Ross said in the statement.

Shares of optical companies including Lumentum Holdings Inc fell 6.6 percent and Finisar Corp dropped 2.7 percent.

A worker installs the logo of ZTE, a Chinese communications company in Nanjing, China.

In February, the Federal Bureau of Investigation warned against trusting phones manufactured by Huawei and ZTE without publicly providing any real evidence the Chinese companies were doing anything wrong. It accounted for 10% of the United States smartphone market past year, making it the fourth largest supplier, according to market research firm Counterpoint Technology.

The US action takes aim at a profitable network equipment business for ZTE, which sells key telecommunications hardware and software to mobile services providers around the world.


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