ZTE has been given a lifeline because "the U.S. still needs China," according to Allan Zhang, founder and Chief Executive Officer of cybersecurity company Trustlook. Two years ago, Trustlook identified 43 smartphone manufacturers that pose a potential espionage threat due to their connection to Chinese firmware-over-the-air (FOTA) ADUPS, with ZTE being one of the listed names, alongside the likes of Lenovo and BLU. The firm in question was found to have been harvesting personal user information without consent, with its software being pre-installed on up to 700 million Android devices. Among other things, the malicious firmware was capable of mining call histories and text messages, though ZTE said none of its Android products sold in the U.S. ever shipped with the ADUPS-made spying technology.
President Trump said Wednesday the currently ongoing ZTE episode is connected to Washington's trade negotiations with Beijing but noted the talks are yet to start, thus reversing the federal administration's stance on the matter that previously saw U.S. officials claim the two are unrelated. The original sanction is still believed to have been issued by the Commerce Department independently, having stemmed from the company's violations of U.S. trade sanctions imposed on North Korea and Iran which already forced it to agree to an $892 million fine and other concessions, not all of which ended up being fulfilled.
ZTE is presently banned from purchasing or licensing any kind of American equipment and technologies like Qualcomm's chips and Google's Android apps, including the Play Store itself. The seven-year ban is now likely to be lifted, at least until ZTE's appeal is formally heard and ruled on, with the President saying Sunday he's working with China to resolve the matter and bring ZTE "back into business" as quickly as possible. Those comments were made in conjunction with remarks about the issue already eliminating jobs in China, prompting significant backlash from both sides of the political spectrum in the United States. ZTE called the ban unfair, claiming its failure to comply with the 2017 settlement was self-reported to Washington and accidental. The Commerce Department also accused the company of repeatedly lying to its investigators.