ZTE to pay $1B penalty in deal with US Commerce Department

11 June, 2018, 17:41 | Author: Gerard Cortez
  • Donald Trump

The deal which ZTE has agreed to would see the company pay a $1 billion fine, with $400 million in escrow should the company break the terms of agreement again.

Chairman Yin Yimin's letter also apologized to ZTE's 80,000 employees, according to the South China Morning Post. The government will suspend the 10-year ban but it can activate the ban if there are any violations.

Under the deal, the ban is suspended for 10 years and can be activated by Commerce should the company commit additional violations during that decade-long "probationary period", the department said in a statement announcing the agreement.

The United States and China have reached a deal that allows the Chinese telecommunications giant ZTE Corp.to stay in business in exchange for paying an additional $1 billion in fines and agreeing to let US regulators monitor its operations.

Ross said on Thursday the penalty is the largest the Commerce Department has ever levied.

ZTE, headquartered in the southern city of Shenzhen, declined to comment on the report. Ross, speaking on CNBC today, said that a compliance team picked by the us will be embedded at ZTE. China has vowed to retaliate on everything from US soybeans to airplanes, and said it will abandon its commitments if the USA follows through on its tariff threat. It was reported that last month T-Mobile was going to walk away from an agreement worth more than $1 billion to distribute ZTE smartphones, among other products, in the U.S.

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Commerce had imposed a seven-year ban on ZTE doing business in the U.S.in April as part of a package of penalties levied after the company sold American-made products to Iran, a violation of USA sanctions. That left a US deficit of more than $375 billion.

Ross said on Sunday he had been having frank, useful talks in China about exports, as Washington presses its message to Beijing about structural economic changes amid the festering trade dispute.

It's been a really rough couple of months for ZTE, but according to new reports, the company's troubles may soon be over as it has apparently almost reached a deal with the United States government.

Qualcomm Chief Executive Officer Steven Mollenkopf said on Thursday he hoped the ZTE agreement would pave the way for the NXP approval.

Shares of Qualcomm Inc rose 2 percent to $61.255, while NXP jumped 6.2 percent to $121.60.

ZTE supplier Oclaro Inc OCLR.O rose nearly 1 per cent while Acacia Communications Inc ACIA.O was down 1.5 per cent. Oclaro got 18 per cent of its business from ZTE previous year, while 30 per cent of Acacia's total revenue was from ZTE.

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