ZTE believes last week's supply ban imposed on it by the United States Department of Commerce is related to recent tensions between Washington and Beijing over trade, having said as much during a Wednesday conference call with suppliers, Reuters reports. Last Monday, the U.S. government issued a prohibitive order preventing all American companies from selling and licensing any kind of products to the Chinese firm, including both hardware and software. The move came after the federal agency accused ZTE of lying in their recent correspondence and breaking the terms of their 2017 settlement over ZTE's violations of U.S. trade sanctions imposed on Iran.
Last year, the Chinese company pleaded guilty to the conspiracy to violate those limitations, having agreed to pay an $892 million fine, fire four executives, and discipline 35 other by either withholding their bonuses or reprimanding them. The latter part of the settlement was never fulfilled for unknown reasons, prompting the Commerce Department to opt for an even harsher sanction, effectively cutting off ZTE's American supply chain for a seven-year period. The tech giant called the move "unacceptable" and unfair, having argued the transgressions it was being punished for were discovered internally and self-reported to the U.S. government for the purpose of maintaining maximum transparency, suggesting the federal body's reaction to them was too harsh.
ZTE hence believes the development is related to the growing tensions between the U.S. and China that are now moving toward a full-blown trade war as the supply ban imposed on the firm wasn't made "in vacuum," a company representative said during yesterday's conference call. ZTE already confirmed it opted to take "certain actions" against the Commerce Department that it's legally allowed to but has yet to publicize its next move. Should the ban stand, it would effectively kill its smartphone business in the U.S. and likely have a similar impact on its global ambitions in the mobile industry given how it would prevent the company from purchasing Qualcomm's Snapdragon chips and licensing Google's Android operating system, among other things.