USA bans sales to Chinese phone-maker ZTE

Visitors pass in front of the ZTE Corp. booth at the Mobile World Congress in Barcelona Spain

Visitors pass in front of the ZTE Corp. booth at the Mobile World Congress in Barcelona Spain

"This egregious behavior can not be ignored", he said.

At this point, any carriers in the USA that are still using ZTE gear should probably find replacements.

It is playing to concerns that the continuing trade tension between the U.S. and China could turn into a full-blown trade war, which would be damaging to the United States economy. President Donald Trump threatened tariffs on $150 billion in Chinese imports for alleged violations of intellectual property rights, while Beijing vowed to retaliate on everything from American soybeans to planes. This ban was put in place after ZTE broke an agreement with the USA government that was reached after it illegally shipped U.S. technology to Iran and North Korea.

"We believe Huawei, Nokia and Fiberhome are best positioned to pick up business ZTE loses in China", Leopold said in a report. It said the Shenzhen-based company has cooperated with hundreds of USA companies and contributed to the country's job creation.

Companies could be banned from selling components to ZTE for up to seven years.

ZTE was caught red-handed engaging in trade that violates US law. And the issue appears to be growing in importance for the USA wireless industry considering a new report indicates China may well take the lead in the race to 5G based on the resources the country appears to be putting toward the network technology.

Shares of smaller companies that rely even more on sales to ZTE fell sharply after the announcement. Altogether, US companies are thought to account for 25-30 percent of the components ZTE typically uses in a smartphone. The company's U.S. suppliers, including Qualcomm and Acacia, will be barred from sending their hardware to China for ZTE to use.

Lumentum declined to comment, while others optical component makers were not immediately available for comment.

According to Financial Times, the UK National Cyber Security Centre (NCSC) has sent a letter to telcos, Ofcom, and ZTE stating that the use of equipment from the Chinese manufacturer would create national security risks that "could not be mitigated effectively or practicably".

Monday's denial of export priviliges by the US Department of Commerce's Bureau of Industry (BIS) was a "relevant factor" in the NCSC's decision to blacklist ZTE, Levy wrote. The Department of Commerce warned that ZTE could be banned from sourcing from its US suppliers and it avoided that by paying $890 million in fines and penalties.

Mr Obama and the USA commerce department banned companies from doing business with ZTE for seven years, for allegedly violating a 2017 settlement over allegations it has sold equipment to Iran and North Korea.

ZTE paid $890m in fines and penalties, with an additional penalty of $300m that could yet be imposed.

ZTE is a phone company that doesn't have a huge following in this country, mainly because they're not as mainstream as Apple or Samsung, and haven't spent as much on publicity establishing themselves as someone like Huawei.

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