ZTE has objected to the imposition of a seven-year ban on importing any US components as part of the ongoing fallout over allegations that the company violated US sanctions by selling equipment with US components to Iran and North Korea.
In a statement, ZTE said it is “unacceptable” that the US Department of Commerce's Bureau of Industry and Security has imposed the most severe penalty on the company even before the completion of the investigation of facts.
The Department of Commerce last week activated a seven year prohibition on US companies exporting products to ZTE.
The prohibition had been imposed in March last year, when ZTE agreed to pay $892.3 million to settle the US investigation into the sanctions case. The ban, as well as a $300 million additional penalty, were suspended for a seven-year period as long as ZTE complied with the requirements of the settlement agreement.
But the Department of Commerce has now imposed this ban after accusing ZTE of making false statements during settlement negotiations and the probationary period relating to disciplinary actions the vendor claimed it was taking on senior employees embroiled in the sanctions case.
The action has been taken on the grounds that ZTE did not reduce bonuses offered to the employees or issue them letters of reprimand in a timely manner.
But the company said this ignores the disciplinary action that has been taken and the fact that the company has engaged a prestigious US law firm to conduct an independent investigations.
“The Denial Order will not only severely impact the survival and development of ZTE, but will also cause damages to all partners of ZTE including a large number of US companies,” ZTE said.
“In any case, ZTE will not give up its efforts to resolve the issue through communication, and we are also determined, if necessary, to take judicial measures to protect the legal rights and interests of our company, our employees and our shareholders, and to fulfill obligations and take responsibilities to our global customers, end-users, partners and suppliers.”
The department's decision comes in the wake of the recent ban on US government departments buying devices and equipment from fellow Chinese vendor Huawei.
At the Huawei Analysts Summit in Shenzhen last week, Huawei rotating chariman Eric Xu appeared to acknowledge that the company has been largely locked out of the US market.
”For Huawei, we still focus on doing our own things well. No matter what difficulties we encounter, we can only survive and thrive by doing our own business well and serving our customers better,” he said.
“There are things we cannot change its course, and it’s better not to put it on top of your mind. In this way, we have more energy and time to serve our customers, and to build better products to meet the needs of our customers. In some cases, just let it go and we’ll feel at ease.”
The timing of the two decisions have spurred speculation that Huawei and ZTE may have been casualties in the ongoing trade war between the US and China, which has also led to the imposition of tariffs on the importation of multiple categories of products.
There has also been speculation that China may be retaliating by holding out on providing US chipmaker Qualcomm with regulatory approval to acquire NXP Semiconductors.