ZTE Will Not Be Able To Buy Qualcomm Processors Anymore

17 April, 2018, 18:47 | Author: Brenda Erickson
  • A Chinese national flag and two flags bearing the name of ZTE fly outside the ZTE R&D building in Shenzhen China

Secretary of commerce Wilbur L.Ross Jr said: "ZTE misled the department of commerce". That is what this decision is, which will see ZTE unable to export from American companies for seven years.

Its phones in the United States use chip sets and processors from Qualcomm, according to company specifications on its U.S. website, which showed all its "signature" phones using Qualcomm chip sets such as Snapdragon 820 and Snapdragon 617.

Following the guilty plea, the company agreed with the U.S. government to pay $890 million (€720 million) in penalties and fire four senior employees and discipline 35 others, a Commerce Department spokesman told Reuters news agency.

ZTE suspended trade on the Shenzhen and Hong Kong bourses on Tuesday as it became engulfed in the controversy. The suspension was reversible if ZTE failed to comply with the agreement or violated additional rules.

Shares of big U.S. ZTE suppliers fell sharply on the Commerce ban. Other impacted companies include Lumentum Holdings, Finisair Corp, and Oclaro Inc, all of which do (or did) substantial business with ZTE.

US manufacturers have also been barred from selling components to the firm as part of a seven-year ban imposed by the US Department of Commerce.

ZTE did not immediately respond to a request for comment.

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"NCSC assess that the national security risks arising from the use of ZTE equipment or services within the context of the existing United Kingdom telecommunications infrastructure can not be mitigated", said Ian Levy, its technical director, in a statement. Part of the settlement required ZTE to take action against employees involved in the violations, but instead engaged in a cover-up according to U.S. authorities.

Warning that protecting a network from a malicious equipment depends on using other vendors that are not as risky, the NCSC said the risk of both Huawei and ZTE was too much.

Back in 2012, a U.S. Congressional Report stated that Huawei and ZTE could be a threat to national security. The majority of the ZTE smartphones in the USA are sold by the carriers.

"We hope the United States will properly handle the matter in accordance with regulations and create a fair, equitable and stable legal and policy environment for the company", a China's Commerce Ministry responded in a statement.

In the UK, Huawei is a major supplier of networking equipment for fixed and wireless networks and is involved in 5G trials and Internet of Things (IoT) research.

A senior official told reporters the department suspended export privileges for ZTE, meaning it can no longer receive USA components to incorporate into their products "to prevent them from furthering their illegal activities".

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