U.S. takes technology battle up a notch with ZTE export ban

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The company can resume purchasing these components from the US after seven years. ZTE is a Chinese state-owned enterprise.

The U.S. Commerce Department said it banned American companies from selling products to ZTE because the company violated the terms of a deal previous year settling allegations of sanctions busting.

As part of the agreement, Shenzhen-based ZTE Corp promised to dismiss four senior employees and discipline 35 others by either reducing their bonuses or reprimanding them, senior Commerce Department officials told Reuters.

According to the report from Reuters, ZTE has often used components from USA -based companies like Qualcomm, Intel, and Microsoft in its products. "Many banks and companies even outside the U.S. are not going to want to deal with them", said Eric Hirschhorn, a former U.S. Undersecretary of Commerce who was heavily involved in the case.

"ZTE made false statements to the US Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation", said Secretary of Commerce Wilbur Ross Jr. The company will now be banned from incorporating any commodity, software or technology from United States companies in any of its products.

Second, management noted "immaterial exposure" to ZTE from both the core Viavi test and measurement unit and the Cobham side (we estimate 2% of revenue or less for both).

ZTE officials did not immediately respond to requests for comment. After the US placed export restrictions on ZTE in 2016 for Iran sanctions violations, the China's Ministry of Commerce and Foreign Ministry criticized the decision.

The company was supposed to take disciplinary action against multiple individuals at ZTE.

The ruling comes as a outcome of ZTE's actions after a court ruling past year.

The move is the latest crackdown on telecom equipment suppliers by governments around the world who are showing increasing concern about using telecoms networks supplied by Chinese companies.

The US Department of Commerce's Bureau of Industry and Security (BIS) has imposed a denial of export privileges order against ZTE, after coming to the conclusion it lied to the committee on numerous occasions.