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The US has banned American companies from selling parts to ZTE

17 April 2018

As far back as October 2012, a US Congress committee report warned that Huawei and ZTE posed a threat to national security.

According to Secretary of Commerce Wilbur L. Ross, Jr., ZTE made false statements to BIS in 2016 during the settlement agreement and later when an update was requested by the US government. Likewise, the ban also means that that the maker of the popular Snapdragon processor is out a revenue stream for the next seven years.

According to the report from Reuters, ZTE has often used components from usa -based companies like Qualcomm, Intel, and Microsoft in its products. It was fined $890 million and agreed to dismiss four members of senior staff, and to discipline 35 more. Trading in ZTE shares was suspended in Hong Kong. Department officials determined that ZTE has violated terms of its 2017 settlement agreement with the US involving the shipped gear.

The restrictions ban USA companies from selling hardware and equipment to China's ZTE.

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"ZTE acknowledges the mistakes it made, takes responsibility for them, and remains committed to positive change in the company", ZTE's Chairman and Chief Executive Officer Zhao Xianming said at the time.

Just hours later, US manufacturers were barred from selling components to ZTE as part of a seven-year ban imposed by the US Department of Commerce. Qualcomm declined to comment on the matter, while Acacia did not respond to an inquiry.

"If you look at ZTE it sells around 45 million smartphones per year globally, and nearly half of them have Qualcomm chips", said Neil Shah, research director at Counterpoint Research.

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.

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Intel, Microsoft, Qualcomm and Micron Technology are also among U.S. suppliers to ZTE, according to data compiled by Bloomberg. That means that any shipments by US firms of parts to ZTE are blocked.

"ZTE misled the Department of Commerce", Commerce Secretary Wilbur L. Ross in a press release.

The UK National Cyber Security Centre (NCSC) believes that the potential national security risks are too significant to be ignored, and that it would be better if UK telcos stopped buying ZTE hardware to avoid future security problems that wouldn't be easily mitigated. (NYSE:T), T-Mobile US Inc.

U.S. authorities have now accused the company of breaching the terms of the settlement.

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The U.S. hit Chinese telecom firm ZTE with a potentially devastating enforcement action on April 16, prohibiting the company from doing business with American firms.

The US has banned American companies from selling parts to ZTE