ZTE Says "Unacceptable" US Sanction Not Fair, Ponders Lawsuit

ZTE on Friday issued its first statement regarding the Commerce Department's decision to ban the company from purchasing American hardware and software over the next seven years, not accounting for its initial comment which only acknowledged the measure was issued earlier this week. The Chinese original equipment manufacturer said the federal agency's denial order is "unacceptable" and not fair in light of the fact that the transgressions it's meant to punish were identified and reported by ZTE itself for the sake of transparency and its continuous commitment to cooperate with Washington. The tech giant also said it's prepared to exercise all of its legal options in order to protect itself from an unjust order that threatens its very existence, i.e. is effectively preventing it from purchasing components such as Qualcomm's chips and licensing software like Google's Android, the firmware backbone of all ZTE-made smartphones.

The "most severe penalty" ZTE could have received over the latest incident related to its Iran imports has also been issued without any investigation into the matter being concluded and with complete disregard for the progress made by the Chinese firm in regards to its efforts to educate its employees on importing practices through a program that was backed with $50 million in 2017 alone and will receive even larger investments this year, the company said, adding that it already hired an independent U.S. law firm meant to probe the new issues and has taken actions against the employees that it believes were responsible for the latest ordeal. The problem in question stems from the fact that ZTE violated its 2017 settlement meant to put an end to its dispute with Washington over certain imports to Iran, a country under U.S. trade sanctions. In the spring of 2017, ZTE pleaded guilty to a conspiracy to violate those sanctions, having agreed to an $890 million fine and laid off four veteran executives involved in its forbidden imports of U.S. products into the Asian country.

As part of the same settlement, ZTE vowed to discipline 35 other employees partially responsible for the violations by either reprimanding them or withholding their bonuses but failed to do so for reasons that remain unknown. The U.S. Commerce Department also accused the company of lying in its correspondence with the agency but hasn't elaborated on the matter and neither has ZTE, save for claiming the miscommunication has been discovered internally, i.e. asserting that it wasn't caught lying but self-reported unspecified communication ommissions or errors to Washington. The ordeal is presently fueling a wave of patriotism in China and may result in the Far Eastern country's semiconductor industry receiving major investments moving forward, with Beijing now seemingly being adamant to end its reliance on U.S. chips in the future. In 2017 alone, Chinese companies imported some $11 billion worth of semiconductor technologies from American companies, according to multiple industry trackers.

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Dominik Bosnjak

Head Editor
Dominik started at AndroidHeadlines in 2016 and is the Head Editor of the site today. He’s approaching his first full decade in the media industry, with his background being primarily in technology, gaming, and entertainment. These days, his focus is more on the political side of the tech game, as well as data privacy issues, with him looking at both of those through the prism of Android. Contact him at [email protected]