ZTE is in trouble after it was reported that they are about to be served restrictions on exports by the US Commerce Department. The said act is in connection to the Chinese smartphone manufacturer’s apparent violations of export controls.
Based on the documents seen by Reuters, the violations are said to be based on US export controls on Iran. This is big trouble for the Chinese tech firm as the restrictions involve requiring ZTE’s suppliers to apply for an export license before shipping any American-made equipment or parts to the Chinese company, making it more difficult for the company to acquire US products.
And based on a Commerce Department notice, which will be published in the US Federal Register next week, the license applications will be denied. The said limitations are said to take effect this coming Tuesday and the same report also said that it discovered that the limitation will apply to any company worldwide that wants to ship products to the ZTE Corp in China that are American made.
But what did ZTE violate exactly? Well, the company was investigated for alleged export-control violations following a Reuter report where it was exposed that the company has signed contracts to ship millions of dollars worth of hardware and software to Iran’s largest telecoms carrier Telecommunication Co of Iran or TCI and a unit of the consortium that controls it. The said hardware and software are apparently from some of America’s best known tech firms.
The big US companies included have all said that the Iranian contracts are beyond their knowledge. After that incident, Washington has banned the sale of US made tech parts to Iran. Meanwhile the Commerce Department has focused its investigation on whether the Chinese phone maker has acquired the products through front companies and then shipped them to Iran while violating the US sanctions.
Meanwhile the Chinese brand has released a statement saying that the tech firm is highly concerned regarding the reports relating to a certain investigation of the US Department of Commerce. The electronics manufacturer said that they have been “working with associated US government departments on investigations since 2012 and maintains constant communication with associated departments and is committed to fully address and resolve any concerns.”
It was also recently found out that trade in shares of the smartphone maker in Hong Kong and Shenzhen, China has been suspended last Monday. The reason of which is still unknown as the company has declined to make a statement regarding it.
According to Engadget, the reported export limitations could seriously hurt the Chinese company, especially its growing smartphone business. Some of ZTE’s big American partners include Intel and Microsoft which they might look for alternatives in case the restrictions does push through and force them to sever ties with each other.
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