ZTE Is Banned From Purchasing Components Made By US Suppliers

ZTE Is Banned From Purchasing Components Made By US Suppliers

ZTE Is Banned From Purchasing Components Made By US Suppliers

The ban follows an investigation and follow-up guilty-plea in March 2017 that ended with a civil and criminal penalty imposed on ZTE for illegally shipping telecommunications equipment to Iran and North Korea.

As part of the agreement, Shenzhen-based ZTE promised to dismiss four senior employees and discipline 35 others by either reducing their bonuses or reprimanding them, senior USA officials told Reuters.

ZTE's failure to keep to its agreement resulted in the US Department of Commerce announcing yesterday that all American companies are banned from selling components to ZTE for a period of 7 years. "So the Chinese government is overly concerned about USA sanctions against ZTE". For more on this, read the full Reuters report here.

The company "covered up the fact that ZTE paid full bonuses to employees that had engaged in illegal conduct, and failed to issue letters of reprimand", the US Department of Commerce said.

The West warned telecoms operators not to use ZTE equipment because its state ownership raised security fears.

"This will be devastating to the company, given their reliance on USA products and software", Douglas Jacobson, an exports control lawyer who represents suppliers to ZTE, said of the ban on supplying the company.

ZTE agreed in March of previous year to plead guilty and pay as much as $1.2 billion for violating USA laws restricting sale of American technology to Iran.

As U.S. concerns about safeguarding its chip technology and cutting its trade deficit grow, the tech sector has become a flashpoint in the broader battle about trade and economic policy, with U.S. President Donald Trump accusing Chinese firms of intellectual property theft for years.

To make matters worse, the USA department found that ZTE also lied about its actions and provided "false statements to the (country's) government" after they had been caught on put on its Entity List.

Following a report in the UK's Financial Times newspaper on Monday, the UK's National Cyber Security Centre (NCSC) published a brief statement on its website describing ZTE Corp.

On Monday, the UK's National Cyber Security Centre (NCSC) warned United Kingdom telecoms firms against using equipment from ZTE due to "national security" concerns.

ZTE uses a number of US suppliers, including Intel, Microsoft, Micron Technology and Qualcomm.

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. ZTE was a regular purchaser from Qualcomm Inc., Intel Corp., Acacia Communications and lumentum Holdings Inc. Oclaro generates about between 10% and 15% of revenue from both Huawei and ZTE and gets another 10% from Nokia. The technology bought by the company includes components central to its products.

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