The Department of Commerce of the United States has just announced a ban on US exports to the Chinese manufacturer of smartphones ZTE. That means that US companies such as Dolby and Qualcomm will not be able to export any parts to ZTE for up to seven years. The loss of Qualcomm is particularly damaging, as it severely restricts ZTE options for devices in the US market.
The Commerce Department says that ZTE failed to maintain a plea agreement after it pleaded guilty last year to the illegal shipment of US equipment to Iran and North Korea. Part of the deal was that ZTE reprimanded and denied bonuses to employees who had acted illegally. But the company did not comply with this part of the deal. It provided full bonuses to those employees and only fired four senior officials while keeping 35 employees who had also violated the law on the cover, officials told Reuters.
"Instead of reprimanding ZTE staff and senior management, ZTE rewarded them, and this heinous behavior can not be ignored," Commerce Secretary Wilbur Ross said in a press release.
The company had also agreed at that time to lose its export privileges for seven years if it did not comply with the agreement, which is what is happening now. The Verge contacted ZTE for comments.
The phone maker is also under scrutiny in the United Kingdom, where the National Cybersecurity Center (a cybersecurity body) issued a letter today to the telecommunications industry warning against the use of ZTE equipment or services, citing risks to the National security. The letter was shown to the Financial Times. The letter states that since the United Kingdom already uses Huawei equipment, adding an additional Chinese supplier would further increase the difficulty of "mitigating the risk of external interference". The National Cybersecurity Center also notes that ZTE violates US sanctions against Iran. and North Korea in the case 2017 had a role in its decision to issue the letter.
These are only the latest responses aimed at addressing the growing concern that the Chinese government may conduct snooping or snoop communications with the network infrastructure made by Huawei and ZTE. The FCC is considering a proposal that would prevent operators buying equipment manufactured by companies from receiving crucial funds.