ZTE is not allowed to export sensitive technology from the U.S. due to new action from the U.S. Department of Commerce. Moreover, U.S. tech suppliers (such as Qualcomm) cannot sell components to ZTE for a period of seven years.
ZTE violated the terms of an agreement it made with the government over previous transgressions and the Commerce Department is coming down on the company hard. Officials at the agency say ZTE made false statements to the Bureau of Industry and Security in 2016 and 2017 concerning executive pay and disciplinary action related to the company’s earlier transgressions.
In 2016, ZTE was temporarily blocked for exporting forbidden technology to Iran. In 2017, ZTE agreed to pay a huge fine to settle the matter, as well as fire four executives and discipline 35 other managers. In the wake of those events the company did not take the proper disciplinary action, according to the Commerce Department.
“ZTE misled the Department of Commerce. Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behavior cannot be ignored,” said Commerce Secretary Wilbur Ross.
While ZTE did in fact fire four managers, the company recently admitted it did not take any action at all against the other 35 managers.
“We can’t trust what they are telling us is truthful,” said an official to Reuters. “And in international commerce, truth is pretty important.” A lawyer representing companies that sell products to ZTE warned of dire consequences. “
This will be devastating to the company, given their reliance on U.S. products and software,” said Douglas Jacobson. “It’s certainly going to make it very difficult for them to produce and will have a potentially significant short and long-term negative impact on the company.”
ZTE did not comment on the matter directly.
