In March 2017, ZTE agreed to a combined civil and criminal penalty and forfeiture of $1.19 billion after illegally shipping telecommunications equipment to Iran and North Korea, making false statements, and obstructing justice including through preventing disclosure to and affirmatively misleading the U.S. Government. ZTE has been buying the hardware from the USA companies and using in its products which are later shipped to Iran and North Korea.
The Department of Commerce has now learned that ZTE made false statements to the US government during the 2016 settlement negotiations as well as the 2017 probationary period.
The move, which also dragged down some United States technology shares, means a block on sales to ZTE by U.S. companies, and ends a 2017 settlement with America, which had suspended a seven-year ban on ZTE's exports in after the company agreed to pay the USA government US$1.2 billion in penalties. USA versions of ZTE phones were found to have a backdoor in 2012.
ZTE officials did not immediately respond to requests for comment.
Shortly after the order was issued, the National Cyber Security Centre also reached out to the United Kingdom's telecom entities saying that using any services or equipment provided by ZTE would be a national security risk. It might also be the first steps through the bureaucratic box ticking mission to officially ban ZTE.
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ZTE is one of the many companies that source mobile processors from Qualcomm and it has done so for quite some time now.
"ZTE misled the Department of Commerce".
The U.S. action against ZTE is likely to further exacerbate current tensions between Washington and Beijing over trade.
The U.S. government's investigation into sanctions violations by ZTE followed reports by Reuters in 2012 that the company had signed contracts to ship millions of dollars' worth of hardware and software from some of the best known U.S. technology companies to Iran's largest telecoms carrier.
The U.S. government had allowed the company continued access to the U.S. market under the 2017 agreement.
Chinese telecoms equipment group ZTE Corp hit back in February against concerns from USA lawmakers that it is a vehicle for Chinese espionage, saying it was a trusted partner of its USA customers.