• Sunday, September 23, 2018

U.S. bans American companies from selling to Chinese phone maker ZTE

Discussion in 'China & Far East' started by F-22Raptor, Apr 16, 2018.

  1. F-22Raptor

    F-22Raptor SENIOR MEMBER

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    LONDON/NEW YORK (Reuters) - The U.S. Department of Commerce has banned American companies from selling components to leading Chinese telecom equipment maker ZTE Corp for seven years for violating the terms of a sanctions violation case, U.S. officials said on Monday.

    The U.S. action, first reported by Reuters, could be devastating to ZTE since 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.

    The ban is the result of ZTE’s failure to comply with an agreement with the U.S. government after it pleaded guilty last year in federal court in Texas to conspiring to violate U.S. sanctions by illegally shipping U.S. goods and technology to Iran.

    The Chinese company, which sells smartphones in the United States, paid $890 million in fines and penalties, with an additional penalty of $300 million that could be imposed.

    “If the company is not able to resolve it, they may very well be put out of business by this. 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.

    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. But the Chinese company admitted in March that while it had fired the four senior employees, it had not disciplined or reduced bonuses to the 35 others.

    Under terms of the ban, U.S. companies cannot export prohibited goods, such as chip sets, directly to ZTE or via another country, beginning immediately.

    Shares of big U.S. ZTE suppliers fell sharply on the Commerce ban. Acacia Communications Inc, which got 30 percent of its total 2017 revenue from ZTE, tumbled 35 percent, hitting a near two-year low.

    Shares of optical companies including Lumentum Holdings Inc fell 6.6 percent and Finisar Corp dropped 2.7 percent. Oclaro Inc, which got 18 percent of its fiscal 2017 revenue from ZTE, lost 13.1 percent.

    ZTE “provided information back to us basically admitting that they had made these false statements,” said a senior department official. “That was in response to the U.S. asking for the information.”


    “We can’t trust what they are telling us is truthful,” the official said. “And in international commerce, truth is pretty important.”

    ZTE officials did not immediately respond to requests for comment.

    The ban on supplying ZTE comes two months after two Republican Senators introduced legislation to block the U.S. government from buying or leasing telecommunications equipment from ZTE or its Chinese rival Huawei Technologies Co Ltd[HWT.UL], citing concern the companies would use their access to spy on U.S. officials.

    Meanwhile, Britain’s main cyber security agency said on Monday it has written to organizations in the UK’s telecommunications sector warning about using services or equipment from ZTE.

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


    “This will be devastating to the company, given their reliance on U.S. products and software,” said Jacobson. “It’s certainly going to make it very difficult for them to produce and will have a potentially significant short and long-term negative impact on the company.”

    ZTE has sold handset devices to U.S. mobile carriers AT&T Inc, T-Mobile US Inc and Sprint Corp. It has relied on U.S. companies including Qualcomm Inc, Microsoft Corp and Intel Corp for components.

    The U.S. action against ZTE is likely to further exacerbate current tensions between Washington and Beijing over trade. After the U.S. placed export restrictions on ZTE in 2016 for Iran sanctions violations, the China’s Ministry of Commerce and Foreign Ministry criticized the decision.

    A five-year federal investigation found last year that ZTE had conspired to evade U.S. embargoes by buying U.S. components, incorporating them into ZTE equipment and illegally shipping them to Iran.

    ZTE, which devised elaborate schemes to hide the illegal activity, agreed to plead guilty after the Commerce Department took actions that threatened to cut off its global supply chain.

    The U.S. government had allowed the company continued access to the U.S. market under the 2017 agreement.

    The new restrictions stem from a Jan. 16 report by a U.S. monitor appointed by a federal judge in Texas who accepted the guilty plea in March 2017. Although Commerce Department officials would not discuss the report, they said the department followed up in February.

    The U.S. government’s investigation into sanctions violations by ZTE followed reports by Reuters in 2012 that the company had signed contracts to ship millions of dollars’ worth of hardware and software from some of the best known U.S. technology companies to Iran’s largest telecoms carrier.

    https://www.reuters.com/article/us-...ling-to-chinese-phone-maker-zte-idUSKBN1HN1P1
     
  2. ZeEa5KPul

    ZeEa5KPul FULL MEMBER

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    @F-22Raptor, "buddy", you're really shooting yourself in the foot here. All the stories you post show the profound depth of American fear and insecurity about the Great Rejuvenation. As a China partisan all I can say is keep up the good work.
     
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  3. F-22Raptor

    F-22Raptor SENIOR MEMBER

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    The US is in a long term geopolitical competition with China. But fear? No...we've played this game before and won decisively. China is just the newcomer on the block that has to be dealt with.
     
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  4. nang2

    nang2 SENIOR MEMBER

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    Great! Another big incentive for Chinese to create alternatives of those American products. I hope one day, those alternatives will turn around and bite Americans in fierce competition.
     
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  5. ZeEa5KPul

    ZeEa5KPul FULL MEMBER

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    Oh, you are deeply mistaken. You haven't played anything like the game you're about to play, not throughout your entire history (both centuries of it :lol:, China's had interregna that lasted longer than your entire existence:omghaha:). Seeing the look you will have on your faces when it becomes clear to you just what you've gotten yourselves into is one of those things that make life worth living.

    :omghaha::omghaha:
     
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  6. F-22Raptor

    F-22Raptor SENIOR MEMBER

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    It's funny that you mention China's "history." The US has contributed more to the advancement of human civilization in the past 200 years than China has in the past 2,000. China even had the largest GDP for centuries and yet you were still left behind by Western civilization.

    China may be "large" but your impact on modern society today has been minimal. Your just another strategic competitor. We can play this game all day.
     
  7. Kiss_of_the_Dragon

    Kiss_of_the_Dragon ELITE MEMBER

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    US won decisively? :rofl: only losers are desperate to find other alternatives (option) to comfort themselves and vent their frustration when they can't compete, it's must be a sour grape for Trump for losing the tariff war, now he is trying to find something to vent his frustration :lol:. Remember this :when US set military embargo on Chinese after 1989, they were expecting China to back down and comply to their demands, not only they got nothing from China but to make matter worst by allowing China to create independent military complex, and we can virtually do what we want.

    Same go...If US ban selling components to ZTE, it will just be a temporary set back but we have trillions as reserve to do the research for better components, it will be great opportunity for Chinese electronic industries to come up with replacement alternative, be independent and eventually compete against US suppliers who made these components and American can kiss goodbye for their monopoly over these component market.

    Remember this, China 2025 is not India 2030.
     
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  8. terranMarine

    terranMarine BANNED

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    From that article i can only make of one thing, US is afraid very afraid :rofl:

    GoPro? Killed by DJI
    TESLA? In deep financial trouble

    We have some very strong brands able to make some innovative products which even US companies are trailing behind. Silicon Valley is just overhyped nothing more.
     
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  9. Pakistani Aircraft

    Pakistani Aircraft FULL MEMBER

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    Against whom and when? The only other Super Power in the 20th century was the Soviet Union and they really didn't trade with the West.
     
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  10. ZeEa5KPul

    ZeEa5KPul FULL MEMBER

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    Good, I wouldn't want China to seize the crown without any challenge; where's the fun in that? Apt that you say "all day", because in the grand sweep of history a day is all you'll have.
     
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  11. KediKesenFare

    KediKesenFare SENIOR MEMBER

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    Why are they using American chips in the first place?
     
  12. Raphael

    Raphael SENIOR MEMBER

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    You can't win. America is the evil empire. America is the embodiment of white supremacy. Under American global hegemony, Afghans, Iraqis, Syrians, Libyans, Yemenis and other dark-skinned people can't sleep tight at night because they don't know if they will be drone-striked or tomahawk'd to death in their slumber.

    Toppling the US will happen because it's not some optional side-quest like in a video game. It is absolutely, without qualification, sine qua non for humanity's continuation. Never forget: your very existence is illegitimate.
     
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  13. oprih

    oprih FULL MEMBER

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    Good, this will help widen the trade deficit in favor of China, then trump will cry some more.
     
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  14. Kiss_of_the_Dragon

    Kiss_of_the_Dragon ELITE MEMBER

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    No one expect US to interfere in civilian business, as a designer when we design a system by selecting a supplier, we expect commitment from the supplier to provide with no interruption for what we need, now US is playing a dirty game, they got china once, in the future American suppliers will be on Chinese manufacturing black list, we rather design something with obsolete parts than selecting US components. It should serve a wake up call for all other Chinese companies such Aviation to avoid using American engine such as GE for China C919.

    I don't know what will happen if China ask Chinese supply chain stop providing any required parts that Apple need to make their Ipad, IPhone and let them redesign or buy from outside and ship to China for assembly...we can interrupt Apple's business and make American feel some pain.
     
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  15. TaiShang

    TaiShang ELITE MEMBER

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    The US has turned itself into the most hated country in the world. The world simply despises them but is still helpless because some sets of historical accident (and others' mistakes) enabled them to gather power that they are not deserved to hold.

    If they bring the latest Syria attack to the UNGA, I believe 70% of the world community will condemn them. Only small allies like UK and France and frightened countries will side with them or remain neutral.

    We ave seen the best example of the US likability in the voting in regards to Jerusalem embassy plan.

    With respect to the news shared by the Indian OP (Yes, @f22-Raptor is an Indian), the US move is not out of confidence, it is out of fear.

    It is a strategic victory on part of China (which may even mean that China has already won but the sides are too kind not to say it) if the US now starts to behave out of fear and lack of confidence. The same we have witnessed when they are summoned state-embedded academia to label China with another pseudo academic tag, Sharp Power.

    I told my student, this is good news. The US is acting on the ground of fear, not confidence. Do not be complacent, but, this perhaps means Mainland China has already won the competition before it has ended.

    For many thinking persons, it is difficult not to dislike a country that has this mentality smeared on its face all along:

    upload_2018-4-17_8-26-53.png

    Now see, who is making history, and who is made by it.
     
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