ZTE kicked out of the US

ZTE kicked out of the US

The sanction against ZTE comes after the Chinese company pleaded guilty in 2017 for the illegal shipment of U.S. equipment to Iran and North Korea. Instead of reprimanding the employees, the company is stated to have rewarded them with full bonuses.

Last night, U.S. Commerce Department's Bureau of Industry and Security (BIS) has imposed a denial of export privileges against Zhongxing Telecommunications Equipment Corporation, which is popularly known as China's ZTE and based in Shenzhen in response to repeated false statements to the U.S. government during negotiations.

The US government's fining of ZTE was already the largest criminal penalty in American history in an export control case. (NYSE: T). According to a report from Reuters at the time, security concerns were raised during the negotiations between Huawei and AT&T.

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.

In March, ZTE agreed to pay $1.2bn in fines after it pleaded guilty to criminal charges of violating USA sanctions on North Korea and Iran, which the NCSC said was a "relevant factor" in its decision.

It also comes amid heightened tensions between the USA and China, which are now engaged in a tit-for-tat exchange of possible tariffs.

The US Commerce Department said that ZTE lied to American officials about punishing employees who violated US sanctions against North Korea and Iran.

ZTE said in a brief statement Tuesday that it is aware of the USA ban.

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"China does not play by our rules, and we must be vigilant against Chinese threats to both our economic security and national security", said Republican Representative Robert Pittenger after the Commerce announcement.

ZTE uses a number of US suppliers, including Intel, Microsoft, Micron Technology and Qualcomm.

American companies are estimated to provide 25 percent to 30 percent of the components used in ZTE's equipment, which includes networking gear and smartphones.

For ZTE itself, the latest US 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.

In a letter seen by the Financial Times, NCSC technical director Ian Levy claims that "the use of ZTE equipment or services within existing telecommunications infrastructure would present risk to United Kingdom national security that could not be mitigated effectively or practicably".

Other optical component companies also slid, with Lumentum Holdings Inc falling 8.9 percent and Finisar Corp dropping 4 percent. ZTE may have to either buy from a competitor or get chips from a Taiwanese company whose products generally lag those of its US rival's in performance.

ZTE has sold handset devices to USA mobile carriers AT&T Inc, T-Mobile US Inc and Sprint Corp.

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