June 22, 2018

United States hits major Chinese tech firm with export ban

17 April 2018, 06:12 | Simon Arnold

West's war on Asian tech continues as US blocks chip sales to ZTE

Secretary Ross Announces Activation of ZTE Denial Order in Response to Repeated False Statements to the U.S. Government

The US Department of Commerce has banned American companies from selling components for seven years to Chinese telecom equipment maker ZTE Corp, which is blamed for breaking an agreement after it was caught illegally shipping goods to Iran.

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. Semiconductor companies such as SoC vendors make wide use of common foundation IP which often can come from United States vendors, say from Cadence or Synopsys. It's also said that ZTE kept on numerous employees that had been involved with violating the law.

The commerce Secretary Wilbur Ross said, "Instead of reprimanding ZTE staff and senior management, ZTE rewarded them".

The five-year U.S. government investigation into ZTE's actions was first revealed in March 2016.

It is also happening as President Donald (Prince of Orange) Trump starts a trade war with China. That ban stops U.S. companies from supplying ZTE with components, which could be devastating to a company that possibly gets between 25 and 30% of its parts from the US. ZTE already sells both its branded and white-label smartphones via mobile carriers AT&T and Verizon in the US.

The tussle over ZTE comes weeks after US and China announced their decision to slap tariffs on each other's products totaling over $100 billion.

"This will be devastating to the company, given their reliance on USA products and software", Reuters quoted him as saying.

ZTE's main business is networking equipment where they are a major player alongside other mentionable companies such as Nokia, Ericsson, Huawei and Cisco.

In the USA, government agencies are already prohibited from using equipment made by ZTE as well as by Huawei due to the risk of back doors and other cyber-threats being built into the firmware of the devices.

Separately, the United Kingdom has also warned United Kingdom telecom companies to not use ZTE equipment and services, on security grounds. The ministry also reported that the Shenzen-based company has worked in co-ordination with a lot of U.S. Companies and has contributed a lot of revenue to the country's job money creation fields.

What's more, earlier this year, a senior official in President Trump's administration confirmed earlier this year USA government is considering developing its own 5G network, containing parts manufactured in China, to counter, er, security threats from China.

Douglas Jacobson, an exports control lawyer who represents suppliers to ZTE, called the ban highly unusual and said it would severely affect the company.

For some context on what prompted this response from the federal government in the first place, leaders from the NSA, CIA, and FBI have apparently expressed their concerns with regards to the activities of ZTE, Gizmodo reports.

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

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