Published: Tue, April 17, 2018
Hi-Tech | By Wayne Curry

ZTE chairman appeals for calm amid U.S. parts ban 'crisis'

ZTE chairman appeals for calm amid U.S. parts ban 'crisis'

A statement from the Commerce Department said that In March 2017, ZTE agreed to a combined civil and criminal penalty and forfeiture of $1.19 billion after illegally shipping telecommunications equipment to Iran and North Korea, making false statements, and obstructing justice including through preventing disclosure to and affirmatively misleading the U.S. Government. Instead of reprimanding the employees, the company is stated to have rewarded them with full bonuses.

ACIA, -35.97% is in Monday after the U.S. Commerce Department said it would prohibit American companies from supplying components to Chinese hardware firm ZTE Corp.

ZTE and Huawei's alleged ties to the Chinese government were also the subject of a USA congressional report in 2012 that focused on the equipment they make for telecommunications networks.

As part of the agreement, ZTE pledged to fire four senior executives and apply sanctions to another 35 employees for participating in these "illegal" actions.

A spokesperson for BT told the Financial Times: "BT takes the security of the UK's critical national infrastructure very seriously and has a robust testing regime in place to ensure that the equipment from all suppliers used in our network remains secure".

The ban is a blow to the face to many USA companies that supply ZTE with components, including Qualcomm Corp., Lumentum Holdings Inc. and Finisar Corp., all of whose shares dropped after the announcement. "This egregious behaviour can not be ignored", said U.S. secretary of commerce Wilbur Ross.

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The company has set up a crisis management group in response to the ban, said a ZTE source, declining to be identified as the information was confidential.

The UK's National Cyber Security Centre (NCSC) has warned that one of China's biggest telecoms infrastructure and smartphone firms is a national security risk.

"The UK telecommunications network already contains a significant amount of equipment supplied by Huawei, also a Chinese equipment manufacturer".

Mr Trump has repeatedly accused Beijing of "manipulating its currency", tweeting: "Russia and China are playing the Currency Devaluation game as the USA keeps raising interest rates". To add to the woes, the Britain's National Cyber Security Centre (NCSC) has written to United Kingdom telecoms providers warning them that the use of ZTE's equipment and services could pose a national security risk, the BBC reported.

ZTE uses a number of USA suppliers, including Intel, Microsoft, Micron Technology and Qualcomm. ZTE was a regular purchaser from Qualcomm Inc., Intel Corp., Acacia Communications and lumentum Holdings Inc.

For ZTE itself, the latest USA action means one of the world's top makers of smartphones and communications gear will no longer be able to buy technology from American suppliers, including components central to its products. It has relied on USA companies including Qualcomm Inc, Microsoft Corp and Intel Corp for some components.

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