Chinese tech giant ZTE is back in business – plus or minus $1.4bn and its entire board

Mostly minus... as Republicans and Democrats seethe at deal

The US government will let ZTE use American-made electronics again, as the result of a settlement following the Chinese smartphone-maker exporting technology to Iran and North Korea.

The deal, announced on Thursday by Commerce Secretary Wilbur Ross, will require ZTE to cough up a $1bn fine, and place another $400m in escrow against any future fines. The entire management board must step down within 30 days, and the manufacturer will have to pay for a team of "special compliance coordinators" to monitor for further sanctions busting.

"BIS [the US government's Bureau of Industry and Security within the Department of Commerce] is imposing the largest penalty it has ever levied and requiring that ZTE adopt unprecedented compliance measures," said Secretary Ross in a statement.

"We will closely monitor ZTE's behavior. If they commit any further violations, we would again be able to deny them access to US technology as well as collect the additional $400m in escrow. The first settlement with ZTE set a record for civil and criminal penalties in an export control case. This new settlement agreement sets another record, and brings the total penalties assessed on ZTE to $2.29bn."

In May, ZTE announced it was ceasing operations following the imposition of a seven-year embargo against the use of American technology in its handsets, including Qualcomm-designed processors, Corning glass and potentially even Android licenses from Google.

Tourist in Beijing China

US-China trade war is back on: White House repeats threat to tax Middle Kingdom imports


The ban came as a result of ZTE failing to punish staff who sold kit featuring American technology to Iran and North Korea. Selling stuff containing US knowhow to the Axis of Evil is a big no-no. In an earlier settlement arising from that misstep, ZTE was supposed to give those responsible the heave-ho, but instead paid them bonuses. When this was discovered, US officials went ballistic – and activated the years-long embargo.

When those sanctions last month forced ZTE to halt its assembly lines, US President Donald Trump appeared to get all fired up over the issue, promising that he would sort it out to protect manufacturing jobs in China, er, no wait, America. Now some politicians are claiming that he pushed for a settlement for his own reasons.

"This deal is a loser for American security and a loser for American workers. The Trump administration is giving ZTE and China the green light to spy on Americans and sell our technology to North Korea and Iran, as long as it pays a fine that amounts to a tiny fraction of its revenue," said Senator Ron Wyden (D-OR).

"The president is making America less safe, creating jobs in China and securing nothing for American workers in return. The only question is whether this was the price of Ivanka's trademarks and the $500 million loan to an Indonesian Trump development."

There was anger, too, on the Republican side among those members who aren't particular fans of the current occupant of the White House, such as this missive from Senator Marco Rubio (R-FL), or Little Marco as President Trump likes to call him...

There's no doubt that this is a serious fine for ZTE, a corp that made $716m in profit last year and lost $369m in 2016. Compared to the traditional slap on the wrist US companies get when they are caught breaking the law, the Chinese certainly haven't got off lightly.

On the other hand, this is the same ZTE that American and British officials have warned is a national security risk in the West due to its close ties with Beijing. The same ZTE that can now take US components for its gear. ®

Similar topics

Broader topics

Other stories you might like

  • Chinese startup hires chip godfather and TSMC vet to break into DRAM biz
    They're putting a crew together, and Beijing's tossed in $750m to get things started

    A Chinese state-backed startup has hired legendary Japanese chip exec Yukio Sakamoto as part of a strategy to launch a local DRAM industry.

    Chinese press last week reported that Sakamoto has joined an outfit named SwaySure, also known as Shenzhen Sheng Weixu Technology Company or Sheng Weixu for brevity.

    Sakamoto's last gig was as senior vice president of Chinese company Tsinghua Unigroup, where he was hired to build up a 100-employee team in Japan with the aim of making DRAM products in Chongqing, China. That effort reportedly faced challenges along the way – some related to US sanctions, others from recruitment.

    Continue reading
  • Intel delivers first discrete Arc desktop GPUs ... in China
    Why not just ship it in Narnia and call it a win?

    Updated Intel has said its first discrete Arc desktop GPUs will, as planned, go on sale this month. But only in China.

    The x86 giant's foray into discrete graphics processors has been difficult. Intel has baked 2D and 3D acceleration into its chipsets for years but watched as AMD and Nvidia swept the market with more powerful discrete GPU cards.

    Intel announced it would offer discrete GPUs of its own in 2018 and promised shipments would start in 2020. But it was not until 2021 that Intel launched the Arc brand for its GPU efforts and promised discrete graphics silicon for desktops and laptops would appear in Q1 2022.

    Continue reading
  • Former chip research professor jailed for not disclosing Chinese patents
    This is how Beijing illegally accesses US tech, say Feds

    The former director of the University of Arkansas’ High Density Electronics Center, a research facility that specialises in electronic packaging and multichip technology, has been jailed for a year for failing to disclose Chinese patents for his inventions.

    Professor Simon Saw-Teong Ang was in 2020 indicted for wire fraud and passport fraud, with the charges arising from what the US Department of Justice described as a failure to disclose “ties to companies and institutions in China” to the University of Arkansas or to the US government agencies for which the High Density Electronics Center conducted research under contract.

    At the time of the indictment, then assistant attorney general for national security John C. Demers described Ang’s actions as “a hallmark of the China’s targeting of research and academic collaborations within the United States in order to obtain U.S. technology illegally.” The DoJ statement about the indictment said Ang’s actions had negatively impacted NASA and the US Air Force.

    Continue reading
  • TikTok US traffic defaults to Oracle Cloud, Beijing can (allegedly) still have a look
    Alibaba hinted the gig was worth millions each year

    The US arm of Chinese social video app TikTok has revealed that it has changed the default location used to store users' creations to Oracle Cloud's stateside operations – a day after being accused of allowing its Chinese parent company to access American users' personal data.

    "Today, 100 percent of US user traffic is being routed to Oracle Cloud Infrastructure," the company stated in a post dated June 18.

    "For more than a year, we've been working with Oracle on several measures as part of our commercial relationship to better safeguard our app, systems, and the security of US user data," the post continues. "We still use our US and Singapore datacenters for backup, but as we continue our work we expect to delete US users' private data from our own datacenters and fully pivot to Oracle cloud servers located in the US."

    Continue reading

Biting the hand that feeds IT © 1998–2022