ZTE Just Dealt Major Blow by US

NCSC warns UK telcos against ZTE equipment due to 'national security' concerns

The ban is the result of ZTE's failure to comply with an agreement with the United States government after it pleaded guilty past year in federal court in Texas to conspiring to violate U.S. sanctions by illegally shipping usa goods and technology to Iran, the Commerce Department said.

The US government has banned sales by American companies to China's ZTE Corp to punish the Chinese telecommunications equipment supplier after it allegedly made false statements during an investigation into sales of its equipment to Iran and North Korea. ZTE agreed to a criminal and civil fine of $1.19 billion in 2017, and in addition to this, said it would fire four of its executives and either reprimand or cut back bonuses of 35 other workers. The DOC, however, contends that ZTE failed to significantly penalize those employees.

According to the Commerce Department, Monday's action stems from ZTE's failure to live up to terms of a March 2017 civil and criminal settlement with USA regulators. Four senior managers and 35 members of staff were supposed to either be shown the door or had their bonuses removed, though the firm apparently paid the full amount to the nefarious employees further infuriating Ross. "This egregious behavior can not be ignored." and an official claimed that ZTE had admitted to false statements.

An export ban means U.S. component makers will be banned from selling to ZTE, which regularly buys handset chipsets from Qualcomm, and optical components from such companies as Maynard, Acacia, Oclaro and Lumentum, Jefferies equities analyst Edison Lee wrote in a report titled "All hell breaks loose".

The Commerce Department has imposed a "denial of export privileges" against ZTE, which translates to a ban on U.S. companies selling any products and services to the China-based company.

Under terms of the ban, United States companies can not export prohibited goods, such as chip sets, directly to ZTE or via another country, beginning immediately.

China is trying to gain access to sensitive USA technologies and intellectual properties through telecommunications companies, academia and joint business ventures, U.S. senators and spy chiefs had warned.

Acacia Communications Inc, which earned 30 per cent of its total 2017 revenue from ZTE, tumbled as much as 34.7 per cent in early trade, hitting a almost two-year low.

"We can't trust what they are telling us is truthful", the official said.

Obviously, it has the potential to severely impact ZTE's business in a negative way. It has relied on U.S. companies including Qualcomm Inc, Microsoft Corp and Intel Corp for components.

Trade tensions with China have been rising, with the Trump administration threatening to impose tariffs on Chinese imports.

On its website, ZTE says it is the fourth largest supplier of smartphones in the USA, serving all four major wireless operators with low and mid-price handsets - including devices for pre-paid plans.

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