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Robert Delaney

The US government has banned sales by American companies to China’s ZTE Corp to punish the Chinese telecommunications equipment maker after it allegedly made false statements during an investigation into sales of its equipment to Iran. 
The move, which also dragged down some US technology shares, reactivates a block on ZTE’s exports and all sales to the company by US suppliers for seven years. A brokerage cut its estimate for the company’s revenues in 2018 and 2019. 
LATEST: Keep calm and carry on, ZTE chief says in leaked memo amid US ban
A settlement with Washington keeping the ban from going into effect had been in place since March 2017, after ZTE agreed to punish those responsible for covering up its sales to Iran and pay about two-thirds of a US$1.2 billion penalty. 


Those sales of “hundreds of millions of [US] dollars” worth of routers, microprocessors and servers to Iranian entities violated the US’s Export Administration Act of 1979, according to an order by the US Department of Commerce. 
“ZTE made false statements to the US Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation,” Secretary of Commerce Wilbur Ross was quoted as saying in an announcement by the department. 
Timeline: how did China’s largest listed 5G phone equipment maker land itself in hot water?
Follow-up requests this year for documentation that ZTE punished nearly 40 employees running a unit conducting business with Iran and covering up the deals revealed that disciplinary action had not been taken, contrary to ZTE’s earlier pledges, according to the order. 
ZTE likely to miss shipments as US bans export of components
“The provision of false statements to the US government, despite repeated protestations from the company that it has engaged in a sustained effort to turn the page on past misdeeds, is indicative of a company incapable of being, or unwilling to be, a reliable and trustworthy recipient of US-origin goods,” the department said in its order. 


The commerce department’s move comes amid the threat of a US-China trade war in which more than US$250 billion worth of two-way product trade faces punitive tariff walls if the two sides fail to agree on concessions that address the concerns of the US Trade Representative office. 
Telecoms giant ZTE returns to profit, gears up for 5G projects
The USTR’s tariffs against China target hi-tech products that are top priorities in Beijing’s industrial modernisation plan, including instruments and apparatus used in telecommunications networks. 




Expect another settlement with the US to take 3 to 5 months. But customer confidence outside China will take longer to restore
Jeffries Group
As China’s largest publicly traded telecommunications equipment manufacturer, ZTE plays a key role in the country’s ability to compete globally in the industry. 
Yin Yimin, the chairman of ZTE, said in a regulatory filing last month that the company expected “an accelerated process of 5G commercialisation” as 4G mobile network operators start to push forward network upgrades. 
Regulator aims to shield US telecoms networks from cyberespionage
Still, any interruption in US components would cause ZTE to miss shipments and lose orders, likely cutting the company’s 2018 revenue by 13.5 per cent, and threatening its plan to maintain its edge in 5G telecommunications technology.
“The newly imposed export ban by the US is likely to cause ZTE to lose market share in both transmission and handsets,” Jefferies Group said in a research note. “Expect another settlement with the US to take 3 to 5 months. But customer confidence outside China will take longer to restore, especially potential 5G customers.”
Sci-fi future beckons in China as ZTE accelerates 5G roll-out
The US commerce department’s action against ZTE prohibits large American companies like Qualcomm and Micron Technology from selling their chips and components to ZTE, China’s largest listed telecommunications equipment supplier. 


Shares of smaller companies that rely on sales to ZTE more fell sharply after the announcement. 
Acacia Communications Inc, for example, fell by more than a third in NASDAQ trading. 
The company said that it was aware of the commerce department’s actions and that it was “taking steps to suspend affected transactions and is assessing the impact of these developments on Acacia”. 
Explainer: Here’s why ZTE settled over US sanction charges
The commerce department announcement and official order also referred to ZTE’s sales of telecommunications equipment to North Korea, but did not provide any specifics about those deals. 

The department’s findings contradict an earlier statement of ZTE’s violations by the company’s president Zhao Xianming, who said in March 2017, soon before reaching the settlement with Washington, that “ZTE acknowledges the mistakes it made, takes responsibility for them and remains committed to positive change in the company”. 
“We have learned many lessons from this experience and will continue on our path of becoming a model for export compliance and management excellence,” Zhao added at the time. 
Chinese exporters in race to boost sales before US tariff increases
The commerce department’s reactivation of the order against ZTE also obliges the company to pay the remainder of the original penalty, or about US$300 million.


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US slaps China’s ZTE with 7-year components ban for breaching terms of sanctions settlement

The telecoms company was found to have violated terms of a deal after pleading guilty to shipping US technology to Iran

(FILES) This file photo taken on February 27, 2017 shows a visitor testing ZTE Blade v8 phone on the first day of the Mobile World Congress in Barcelona. The US government has slapped $1.2 billion in fines on Chinese telecom giant ZTE for violations of US export controls for selling goods to Iran and North Korea, officials announced on March 7, 2017.It is the largest criminal penalty in US history in an export control case, government officials said. The company will pay $892 million, while another $300 million in penalties are suspended for seven years.ZTE also agreed to plead guilty to three charges, including obstructing justice for hiding information from government investigators, the officials said. The agreement is subject to court approval. / AFP PHOTO / LLUIS GENE

Visitors test smartphones at telecom manufacturer ZTE Corp's stand during the Mobile World Congress in Barcelona, Spain, in 2016. The US Department of Commerce is prohibiting American component sales to ZTE after finding that ZTE breached the terms of a sanctions violation case it had settled last year, US officials said on Monday. Photo: AFP

China’s ZTE gets US sanctions relief till March 29

The extension allows US firms to continue to supply the Chinese company with components. Photo: Reuters

China's ZTE expected to plead guilty to breaching Iran export controls, says source

A file picture of a ZTE stand at a mobile phone trade fair in Barcelona earlier this month. Photo: AFP

China’s ZTE sets sights on growth after removal from US trade blacklist

ZTE says it has been removed from the Entity List upon recommendation of the Bureau of Industry and Security. Visitors testing smart phones at ZTE's stand during the Mobile World Congress in Barcelona. Photo: AFP

China’s ZTE steps up expansion drive, unfazed by US restrictions

Unfazed by the pressure of keeping its US supply chain intact, ZTE has sharpened its focus on pre-5G mobile infrastructure deployments with network operators. Photo: SCMP Handout

Academus Tian, vice-president of ZTE Smart Auto Corporation. 20DEC16 Source: He Huifeng

China’s ZTE aims to launch a 5G smartphone in US by early 2019

The world’s fourth-largest telecommunications equipment supplier, ZTE is expected to compete against the likes of Apple and Samsung, as well as other major Chinese brands, in introducing a 5G smartphone

A visitor tests a smartphone at the booth of ZTE Corp during the 2017 Mobile World Congress exhibition in Barcelona. Shenzhen-based ZTE plans to launch a 5G smartphone either late this year or in early 2019, according to the company’s head of US operations. Photo: Agence France-Presse

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The telecoms company was found to have violated terms of a deal after pleading guilty to shipping US technology to Iran


The telecoms company was found to have violated terms of a deal after pleading guilty to shipping US technology to Iran.
