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ZTE Takes Another Sanctions Hit For Lying To US Gov't

17 April, 2018, 18:53 | Author: Kristen Ingram
  • A Chinese national flag and two flags bearing the name of ZTE fly outside the ZTE R&D building in Shenzhen China

Ross, Jr., the US Secretary of Commerce, has said that ZTE Corp.

The U.S. government announced Monday it is banning American companies from doing certain business deals with a Chinese tech giant for the next seven years. Likewise, the ban also means that that the maker of the popular Snapdragon processor is out a revenue stream for the next seven years.

That's obviously a blow to ZTE, but cutting off major United States companies like Qualcomm from one of the world's largest smartphone manufacturers will hurt the entire Android ecosystem just as much as it hurts ZTE. Under the terms of its guilty plea, ZTE paid $890 million in fines, and agreed to fire some senior staff, and strip bonuses from 35 others. Trading in ZTE shares were suspended today in response.

The U.S. Federal Communications Commission on Tuesday plans to consider a ban on networking equipment from companies such as ZTE and Huawei (huawei).

In response to eWEEK's request for comment on the Commerce Department's action, ZTE's USA -based public relations agency said it hadn't received any comment from the company to share with news media.

Viavi Solutions (VIAV) is one company that has business with ZTE, though only a small amount, according to William Blair analyst Dmitry Netis.

ZTE did not immediately respond to a request for comment.

With the ban now in place, it's unclear how ZTE can keep competing properly in the smartphone market.

NCSC assess that the national security risks arising from the use of ZTE equipment or services within the context of the existing United Kingdom telecommunications infrastructure can not be mitigated.

The U.S. action, first reported by Reuters, could be devastating to ZTE since American companies are estimated to provide 25 percent to 30 percent of the components used in ZTE's equipment, which includes networking gear and smartphones.

ZTE has previously partnered with a number of U.S. carriers.

ZTE said it was aware of the move by the US Commerce Department and that it is assessing the "full range of potential implications".

Denying ZTE export privileges prevents the company from "participating in any way in any transaction" subject to the USA government's Export Administration Regulations, which govern sales of sensitive technology overseas. ZTE already sells both its branded and white-label smartphones via mobile carriers AT&T and Verizon in the US.

But while ZTE isn't the size of Huawei, the blanket ban on U.S. companies selling it hardware is going to cripple the company's product lines - and seriously affect some manufacturers in our own country as well.

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