ZTE says assessing implications of USA decision

17 April, 2018, 20:19 | Author: Julian Harrison
  • A Chinese national flag and two flags bearing the name of ZTE fly outside the ZTE R&D building in Shenzhen China

Beijing has responded to the US' recent seven-year component ban on telecoms firm ZTE by saying that it is ready to take necessary measures to safeguard legitimate rights. Instead of reprimanding the employees, the company is stated to have rewarded them with full bonuses.

The commerce Department also reported that the employees who were involved in the above mentioned illegal act were paid full bonuses by the company ZTE corp. even failed to issue letters of reprimand for those employees and also lied about the practices to USA authorities.

"If the issue can not be solved smoothly and immediately, we think that ZTE will face tremendous disaster and would be forced to scale back on its smartphone business, not only in the USA, but also in other markets", said Strategy Analytics analyst Woody Oh. For more on this, read the full Reuters report here. ZTE, they say, has refused to discipline the employees responsible as per the agreement.

A spokesperson for BT told the Financial Times: "BT takes the security of the UK's critical national infrastructure very seriously and has a robust testing regime in place to ensure that the equipment from all suppliers used in our network remains secure".

The Hong Kong-listed shares of ZTE were suspended on Tuesday.

The US government has also banned US companies from working with ZTE due to a violation of sanctions and imposed a fine of $1.2 billion (£837 million) in 2017.

In a statement, the company said "ZTE is aware of the denial order activated by the United States Department of Commerce". The company said in its latest annual report that it generated 30% of its revenue in 2017 from ZTE.




The company has set up a crisis management group in response to the ban, said a ZTE source, declining to be identified as the information was confidential.

The NCSC said it would be "impossible" to manage risks to the telecommunications sector if ZTE equipment was deployed at scale and that using ZTE equipment and services would have a "long term negative effect" on the security of the UK.

The UK's National Cyber Security Centre (NCSC) has warned that one of China's biggest telecoms infrastructure and smartphone firms is a national security risk.

"The U.K. telecommunications network already contains a significant amount of equipment supplied by Huawei, also a Chinese equipment manufacturer", NCSC said in a statement. Its products, including smartphones, use such American parts as microprocessors from Qualcomm, glass made by Corning, and sound technology from Dolby.

That's the position Acacia Communications Inc.

ZTE's main business is networking equipment where they are a major player alongside other mentionable companies such as Nokia, Ericsson, Huawei and Cisco.

Other optical component companies also slid, with Lumentum Holdings Inc falling 8.9 percent and Finisar Corp dropping 4 percent.

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