ZTE banned for 7 years from buying components from US companies, including Snapdragon processors

- Adrian Ungureanu

The Chinese company doesn’t help relax the US-China trade relations, which are getting worse everyday. In fact, they actions only help to widen the gap between the two countries 

The US has concluded any trade relations with Iran a few years ago amid the scandal over the development of nuclear weapons by the Middle East country. Thus, all American products or technology shipments to Iran have been stopped. At least officially.

Unofficially some imports into Iran of US technology didn’t stopped. ZTE continued to sell phones and telecommunication equipment in Iran containing components belonging to American companies and they were caught.

ZTE pleaded guilty for conspiring to conspiring to violate U.S. sanctions by illegally shipping U.S. goods and technology to Iran. The company received last summer sanctions of nearly 1.2 billion dollars. They paid $890 million in fines and penalties, with an additional penalty of $300 million that could be imposed.

In addition, they has agreed to take action against employees who have violated sanctions against Iran, saying four senior employees will be dismissed and discipline 35 others by either reducing their bonuses or reprimanding them, senior Commerce Department officials told Reuters. But the Chinese company admitted in March that while it had fired the four senior employees, it had not disciplined or reduced bonuses to the 35 others.

Last month, ZTE admitted that it did not implement all the measures. The four seniors were dismissed but did not take any action on the other 35 employees. This has been annoyed by US authorities who have now decided that ZTE can no longer buy components produced by US companies for the next seven years.

And it’s a pretty big problem, because besides they are forbidden for the next 7 years to buy components from US companies, including Qualcomm’s Snapdragon chipsets for their smartphones. But there are are other important components that ZTE needs for their other products like equipment it produces for telecommunication infrastructures. This is a big problem for the Chinese company.

The problem is that even American companies will be affected by this sanctions against ZTE. About 25-30% of the ZTE components used in smartphones and network equipment are provided by US companies who will now lose an important customer for at least 7 years.

What’s worst this a scandal only fuels Donald Trump’s opinion against Chinese companies and even makes him look good when he’s badmouthing them.