United States hits ZTE with huge ban that has ominous Android implications

17 April, 2018, 10:44 | Author: Darnell Patrick
  • Optical Stocks Under Pressure After US Bans Sales To ZTE

It would suspend a seven-year product ban preventing ZTE from exporting components and parts made in the states as long as it adhered to the signed agreements, and didn't break the rules.

The Chinese company, which sells smartphones in the United States, paid $US890 million ($1.145 billion) in fines and penalties, with an additional penalty of $US300 million that could be imposed. The DOC, however, contends that ZTE failed to significantly penalize those employees.

Commerce said ZTE's actions "demonstrate a pattern of deception, false statements, and repeated violations" and that "ZTE still can not be relied upon to make truthful statements, even in the course of dealings with US law enforcement agencies, and even with the prospect of the imposition of a $300 million penalty and/or a seven-year denial order".

ZTE paid $890 million in fines and penalties and agreed to take other steps but has not followed through, the commerce department said.

In addition to paying back a bunch of cash, ZTE promised the USA government that it would formally reprimand its executives and deny them bonuses for executing this illegal activity. "This egregious behaviour can not be ignored", Ross added.

But the bureau found the reasons behind the failure to comply are "red herrings to ... concerns that the company has repeatedly made false statements to the US government - as the company has now repeatedly admitted". That ban stops U.S. companies from supplying ZTE with components, which could be devastating to a company that possibly gets between 25 and 30% of its parts from the US. Qualcomm is a US-based company, meaning ZTE phones will not be able to use Snapdragon processors.


The ZTE news drove down stocks in companies that stood to lose business.

Acacia Communications (ACIA) lost more than a third of its value, cratering almost 35% to near 26 while Oclaro (OCLR) plummeted 17% to 7.80 in morning trades on the stock market today. This order was issued due to a breach of a settlement between ZTE and the USA government after ZTE was found violating Iran and North Korean sanctions.

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

In a letter sent to telecoms firms, ZTE itself and regulator Ofcom, Ian Levy, director of the National Cyber Security Centre (NCSC), warned the use of ZTE equipment or services within existing infrastructure "would present risk to United Kingdom national security that could not be mitigated effectively or practicably". (NYSE:T), T-Mobile US Inc.

According to the press release, this denial order against ZTE is a regulatory action and has nothing to do with the ongoing trade war between the U.S.A and China.

ZTE was similarly the subject of a 2012 investigation by the FBI and US Commerce Department after allegedly setting up a network of sub-companies to illegally export Microsoft, HP, Oracle, Dell, Cisco, and Symantec products to Iran.

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