Tech Trends & News

Washington banned Chinese ZTE for seven years

The US Commerce Department has banned US companies from selling components to Chinese telecom equipment maker ZTE for seven years for violating the terms of the economic sanctions imposed on Iran.

The Chinese group pleaded guilty last year to a Texas federal court, for illegally supplying Iran with US technology and goods. He had agreed to pay $ 890 million (€ 718 million) in fines and penalties, an amount that could be increased by $ 300 million.

As part of the deal, the Shenzhen-based equipment maker pledged to fire four employees directly concerned and punish another 35 by cutting their premiums or reprimanding them, Commerce Department officials told Reuters.

However, if it did the four dismissals, the Chinese company admitted in March that it had not sanctioned the other 35 employees involved.

ZTE “provided us with information that essentially acknowledged making false statements,” said a senior official in the Commerce Department. “It was in response to information requested by the United States”.

“We can not trust what they tell us,” said the manager. “And in international trade, the truth is very important.”

ZTE did not respond immediately to a request for comment.

On Wall Street, the announcement of the sanctions drops two important suppliers of ZTE, the manufacturers of optical products Acacia Communications and Oclaro, which respectively lose 34% and 17% around 15:00 GMT.

Acacia, the lowest since its IPO in May 2016, had said in a recent financial report that ZTE accounted for 30% of its turnover 2017.

In its latest quarterly publication, Oclaro described ZTE as a “major customer”, while indicating that it had temporarily stopped delivering products in May 2016 due to restrictions imposed by the Commerce Department.

A five-year federal inquiry revealed last year that ZTE had bypassed the US embargo on Iran by buying US components, incorporating them into its equipment and illegally delivering them to the country.

It is estimated that US companies provide 25 to 30 percent of the components used in ZTE’s equipment, including network equipment and smartphones.

The US government has been investigating ZTE since Reuters reported in 2012 that the Chinese equipment manufacturer had signed US software and product delivery agreements with TCI, Iran’s largest telecom operator, and a subsidiary of the consortium that control, for millions of dollars. (Claude Chendjou for French service, edited by Véronique Tison)

by Steve Stecklow and Karen Freifeld