US Govt. Bans Domestic Component Sales to ZTE
The US government has banned domestic tech companies from selling components to Chinese systems vendor ZTE for seven years in a move that will affect chipmakers like Qualcomm, as well as US optical companies such as Finisar.
On March 31, 2017, ZTE was taken off a government export ban list after paying an $892 million fine. The company had been accused of selling communications equipment to Iran and North Korea. (See China's ZTE Comes Off US Trade Blacklist.)
Now, however, the US Commerce Department has slapped the Chinese firm with a seven-year "suspended denial of export privileges" from US companies, after the department said that company made -- and continued to make -- "false statements" during its reprieve and probation. (See ZTE Bounces Back in Q1 After US Trade Fine.)
"ZTE misled the Department of Commerce," said Commerce Secretary Wilbur Ross in a statement. "Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behavior cannot be ignored."
ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) has around a 3% market share for smartphones -- shipping around 10.6 million units a quarter -- according to IHS Inc. , it uses chips from Qualcomm Inc. (Nasdaq: QCOM) among others.
ZTE's US optical suppliers -- such as Acacia, Oclaro and Finisar -- will also be hit by the news. Acacia shares are down 34.34% on the ban at $26.35.
The latest US move comes as it appears that the government is trying to shut Huawei Technologies Co. Ltd and ZTE out of the US market as much as is possible. The government has long frowned upon the use of Chinese networking equipment manufacturing. Recently, it appears to also be pressuring major operators and retailers out of selling Huawei smartphones in the US.
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— Dan Jones, Mobile Editor, Light Reading