The United States Department of Commerce has just announced that it is enacting a major denial of export ruling against ZTE, the Chinese smartphone manufacturer.
Today, the Department of Commerce confirmed that ZTE is no longer capable of ordering parts from American companies, as part of an agreement that ZTE pledged to last year. That means that companies like Qualcomm and Dolby can no longer export their parts to the smartphone manufacturer, which will more than likely have a major impact on the company.
As initially reported by Reuters, and subsequently confirmed by an official statement from the Department of Commerce, the decision to ban ZTE’s ability to buy parts from American companies is tied to a decision that was made last year. In 2017, ZTE pled guilty to “conspiring to violate U.S. sanctions”, which was tied to the fact the company was selling U.S. parts to North Korea and Iran.
“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.”
At the time of the guilty plea, ZTE confirmed it would reprimand those employees tied to the illegal actions, and would also deny them company-specific bonuses. However, ZTE did not hold up its end of the bargain. The company did fire four senior employees tied to the illegal activities, as it said it would, but it dropped the ball when it came to not handing out bonuses to 35 other employees. It also said it did not reprimand those employees, either.
As part of the agreement last year, ZTE said that if it did not follow throw with these promises it would forfeit its export privileges for seven years. Which is what is happening now.