US bans ZTE from sourcing parts in country after lying in probation report

The US Department of Commerce has put into effect an export ban on Chinese tech company ZTE after it lied about and failed to take disciplinary action for violating trade sanctions.

ZTE was originally investigated for doing business with Iranian and North Korean firms in 2012 and was found to have lied to the United States about its business. It agreed to pay $1.2 billion to the agency last year and was slapped with a suspended export ban — if it came into effect, it would mean that the company would not be able to source parts from American companies for the following 7 years. The OEM would avoid the ban pending the execution of certain stipulations of the settlement it struck with the government, including taking disciplinary action against senior executives.

However, the government now states that ZTE made “false statements” as it negotiated the settlement and when reporting on its C-suite punishment.

“ZTE misled the Department of Commerce,” said Secretary Wilbur Ross. “Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behavior cannot be ignored.”

ZTE’s growing presence in the US smartphone market capitulated last October with the launch of the Axon M foldable smartphone on AT&T. Now, it won’t be allowed to procure products from Qualcomm, Corning, Texas Instruments and other US companies that supply components and software for mobile phones, at least directly.

We’re asking ZTE for comment and will update this piece as soon as we receive one.

Update: ZTE released the following statement:

ZTE is aware of the denial order activated by the United States Department of Commerce. At present, the company is assessing the full range of potential implications that this event has on the company and is communicating with relevant parties proactively in order to respond accordingly.

The Denial Order is being issued at the height of President Donald Trump’s growing tariff crusade against China over steel imports. ZTE, also a major telecoms company, has been under suspicion from intelligence agencies under the Department of Defense for being a pawn in spreading the Chinese government’s influence on the internet and being a institutional cybersecurity threat.

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About The Author
Jules Wang
Jules Wang is News Editor for Pocketnow and one of the hosts of the Pocketnow Weekly Podcast. He came onto the team in 2014 as an intern editing and producing videos and the podcast while he was studying journalism at Emerson College. He graduated the year after and entered into his current position at Pocketnow, full-time.