Trump Dismisses ZTE Deal Reports, May Seek $1.3 Billion Fine

AH ZTE logo MWC 2018 3

President Donald J. Trump on Tuesday dismissed reports of reaching a preliminary deal with China over ZTE, having said the seven-year ban on purchasing American technologies will keep the Shenzhen-based firm crippled for the time being. The head of the United States added he may seek a significant financial penalty for ZTE’s latest transgression which could reach $1.3 billion, as well as a new board of directors and major management changes. ZTE may also have to agree to buy a larger percentage of its hardware from American companies than it did before, according to the President.

The development is in line with recent White House comments on the ZTE situation which implied the Chinese original equipment manufacturer won’t weather the latest regulatory storm unscathed even if the Commerce Department-issued ban from April ends up being lifted in the near future. While Washington officials repeatedly insisted ZTE’s case isn’t being used as leverage in trade negotiations with China, the President acknowledged their importance in that respect last week. The head of state is “not satisfied” with the first round of the talks that took place in Washington last week, he revealed earlier today.

Last year, ZTE pleaded guilty to a conspiracy to violate trade sanctions imposed by the U.S. on Iran and North Korea, agreeing to $892 million in fines, as well as additional concessions in the form of four executive sackings. The company failed to discipline 35 employees involved in the original ordeal despite pledging to do so, with the Commerce Department also accusing it of repeatedly lying to its investigators. ZTE maintained its failure to comply with the entire settlement wasn’t intentional and hence can’t be interpreted as an act of defiance, having added it self-reported the issue to U.S. regulators for the sake of transparency. Without Qualcomm’s chips and a new version of Google’s operating system with Google-made apps such as the Play Store, ZTE’s mobile business is effectively dead, with the company already suspending its main operations earlier this month and presently surviving on cash reserves. It’s currently unclear how long can ZTE flirt with bankruptcy, though Beijing is likely to continue pushing for its situation to be resolved as quickly as possible.