ZTE starts receiving U.S. supplies again

ZTE starts receiving U.S. supplies again
The fourth largest smartphone vendor in the U.S. is now officially back in business. On Friday, the U.S. Commerce Department lifted the export ban it had placed on ZTE back in April. The ban prevented the Chinese smartphone and network equipment manufacturer from purchasing needed hardware, software and components from U.S. companies. This reportedly affected about a third of the supplies needed to produce a ZTE smartphone.

Last year, ZTE was punished by the Commerce Department for selling goods and services to North Korea and Iran, both under U.S. sanctions. In addition to paying a large $1.19 billion fine, the company was told by the U.S. agency to place letters of reprimand in the files of 35 employees involved in the illegal transactions with those two countries, and withhold bonus checks to the same employees. While a seven year U.S. export ban was also part of the punishment, the Commerce Department put a stay on the ban until it was apparent that ZTE was not complying with the punishments.

Eventually, the president got involved in the situation by instructing the Commerce Department to work out a deal with ZTE to lift the ban. Eventually, such a deal was reached. ZTE paid a $1 billion fine, put $400 million in escrow for ten years to cover any future violations, had a new Board voted in, and made wholesale changes in the executive offices. The agreement upset a number of U.S. Senators from both sides of the aisle who called ZTE a threat to National Security because of its ties to the Chinese government. The same thing was said about ZTE in a Congressional Committee report from 2012.

ZTE is now under a ten-year suspended ban. Should the company do something that goes against U.S. wishes, the suspension will be removed and the company will once again be unable to source parts from the U.S.

source: Reuters

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