The United States Department of Commerce has just announced a ban on US exports to Chinese smartphone manufacturer 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 Department of Commerce says that ZTE failed to maintain a plea agreement after pleading guilty last year to illegally sending 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 offered full bonuses to those employees and only fired four senior officials while keeping 35 employees who had also violated the law on cover, officials Reuters said.
"Instead of reprimanding ZTE staff and senior management, ZTE rewarded them – this heinous behavior can not be ignored," Commerce Secretary Wilbur Ross said in a press release.
The company had also agreed at that time that it would 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 watchdog) issued a letter to the telecommunications industry today. against the use of ZTE equipment or services, citing risks to national security. The letter was shown to Financial Times . The letter states that since the United Kingdom already uses Huawei equipment, adding an additional Chinese provider would further increase the difficulty of "mitigating the risk of external interference". The National Cybersecurity Center also notes that ZTE's violation of ZTE's sanctions against Iran and North Korea in the case of 2017 played a role in its decision to issue the letter.
These are just 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.