Moreover, the U.S. Commerce Department is expected to count the $361 million ZTE paid past year as part of a settlement agreement, which will allow the government to claim no less than $1.7 billion in penalties.
The Commerce Department said Thursday that ZTE must also put $400 million in escrow - a sum that it would forfeit if it violated Thursday's agreement. This settlement is in response to the U.S. Commerce Department's Bureau of Industry and Security (BIS) denial order that was imposed as a result of ZTE violating its March 2017 settlement agreement. It appears that ZTE could be "back in business" after being consigned to the technological wasteland for breaking last year's deal concerning illegal telecom shipments to Iran and North Korea.
A U.S. Commerce Department spokesman said no definitive agreement has been signed by the two parties. After U.S. regulators announced sanctions against ZTE in April, it wasn't clear the company could even survive.
Under the terms of the settlement, ZTE is paying an immediate $1B fine, on top of the existing $892M in fines they've already paid related to their misconduct in this case. Further fees could be assessed for a grand total as much as $1.7 billion.
As part of this deal, ZTE will also have to replace its board within 30 days as well as accepting "unfettered site visits" from the United States to ensure that components are being used for their claimed objective. ZTE is also required under the new agreement to replace the entire board of directors and senior leadership for both entities.
The June pact is costly for a company with revenues of US$17 billion a year. ZTE has been one of the most affected companies but is close to signing an agreement to continue its collaborations with US-based technology companies, such as Qualcomm.
The compliance team will report jointly to the new ZTE chairman and the US Commerce Department.
It had been speculated that any deal could be scuppered by resistance from both Democrats and Republicans in US Congress, who believe Trump is bowing to pressure and that ZTE could be a possible threat to national security. The company was subverting United States laws by buying U.S. components, incorporating them into its own devices which it exported to Iran and North Korea.
ZTE supplier Oclaro Inc rose nearly 1 percent while Acacia Communications Inc was down 1.5 percent. It was reported that last month T-Mobile was going to walk away from an agreement worth more than $1 billion to distribute ZTE smartphones, among other products, in the U.S.