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U.S. bans American companies from selling to Chinese phone maker ZTE

China Materials 16 April 2018 20:56 (UTC +04:00)
The U.S. Department of Commerce is banning American companies from selling components to leading Chinese telecom equipment maker ZTE Corp
U.S. bans American companies from selling to Chinese phone maker ZTE

The U.S. Department of Commerce is banning American companies from selling components to leading Chinese telecom equipment maker ZTE Corp for seven years for violating the terms of a sanctions violation case, U.S. officials said on Monday, Reuters reports.

The Chinese company, which sells smartphones in the United States, pleaded guilty last year in federal court in Texas for conspiring to violate U.S. sanctions by illegally shipping U.S. goods and technology to Iran. It paid $890 million in fines and penalties, with an additional penalty of $300 million that could be imposed.

As part of the agreement, Shenzhen-based ZTE Corp promised to dismiss four senior employees and discipline 35 others by either reducing their bonuses or reprimanding them, senior Commerce Department officials told Reuters. But the Chinese company admitted in March that while it had fired the four senior employees, it had not disciplined or reduced bonuses to the 35 others.

Shares of big U.S. ZTE suppliers fell on the Commerce ban. Acacia Communications Inc, which got 30 percent of its total 2017 revenue from ZTE, tumbled as much as 34.7 percent in early trade, hitting a near two-year low.

Shares of optical companies including Lumentum Holdings Inc fell 6.8 percent and Finisar Corp dropped 6 percent. Oclaro Inc, which got 18 percent of its fiscal 2017 revenue from ZTE, lost 17.4 percent.

ZTE “provided information back to us basically admitting that they had made these false statements,” said a senior department official. “That was in response to the U.S. asking for the information.”

“We can’t trust what they are telling us is truthful,” the official said. “And in international commerce, truth is pretty important.”

ZTE officials did not immediately respond to requests for comment.

Meanwhile, Britain’s main cyber security agency said on Monday it has written to organizations in the UK’s telecommunications sector warning about using services or equipment from ZTE.

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