Good news for ZTE fans and followers. The Chinese OEM has recently come into an agreement with the U.S. Commerce Department to lift the ban on sourcing components from American sources. This means ZTE can rebuild the mobile business and get back what it has lost the past few months of being banned. There is no official document that shows the official and formal agreement but this is already on the horizon. ZTE is still mum on this development but we’re expecting new ZTE phones will be unveiled in the coming days.
Apparently, ZTE is fined $1 biillion. There’s also the $400 million in escrow to cover violations in the future. Total penalty to be paid is about $1.7 billion if we are to add the $361 million from last year.
You see, ZTE was sanctioned in April for lying to the US government. It was found to be violating some sanctions it was supposed to follow in Iran and North Korea. The company was asked not to ship American-made components to those countries but failed to comply. It even hid the fact but the US Department of Commerce confronted ZTE which pleaded guilty to which the agency responded with a 7-year suspension of denial of export privileges.
Both Huawei and ZTE devices are now banned from being marketed in US military bases. While Huawei is having a hard time keeping its business in the US, ZTE is being refrained from flourishing even after its success the past years.
The US government has always been serious catching violations of the EAR or Export Administration Regulations. This ban was to teach companies a lesson that they should closely follow whatever is served to them by the American government.
Being sanctioned for lying to the US government can be difficult but interestingly, President Trump has ordered the Commerce Department to help out ZTE so it could get back into business fast. ZTE has gotten a second chance via White House as it needs to clean up its act. It’s not clear how but the President told the company to look for ways to make it happen.
ZTE is poised to make big changes within the seven-year ban but it will be lifted soon. Trump is serious with the change as he already declared his intentions to help the Chinese telecommunications giant. The President is being opposed by a number of government officials because ZTE lied in an official investigation. For one, there is US Senator Marco Rubio from Florida going against the idea of giving ZTE a chance and letting the issue slide. Rubio said in a tweet, “China crushes U.S. companies with no mercy & they use these telecomm companies to spy & steal from us. Many hoped this time would be different. Now congress will need to act.”
ZTE isn’t going down yet because they have sufficient cash. The supply chain isn’t cut off just yet and looks like the company doesn’t have to make a major decision. It doesn’t need to cease operations of main business due to U.S sanctions because the President himself wants to make changes.