It appears that Huawei is not the only Chinese smartphone manufacturer that is facing heavy scrutiny from United States federal agencies.
The U.S. Department of Commerce has announced a ban on exporting parts to the Chinese smartphone manufacturer ZTE. As a result of the proclamation, American companies like Qualcomm and Dolby will no longer be able to export critical parts for ZTE’s smartphones, which will have a bigger impact on ZTE’s ability to sell smartphones in the United States market moving forward.
As for the reason why the U.S. Department of Commerce has decided to enact the export ban, it ties back to a court decision last year where ZTE pled guilty to illegally shipping U.S. equipment to both North Korea and Iran. As part of that plea deal, ZTE agreed that it would not only reprimand ZTE employees that were tied to the illegal actions, but also deny them bonuses.
ZTE didn’t follow through with that pledge, however. The company actually handed out bonuses to those employees that acted illegally, except for four that it fired. ZTE kept 35 employees that were tied to the illegal activities.
As part of that legislative decision last year, ZTE also agreed that if it did not meet the terms of those conditions, it would forfeit its export privileges for seven years. That is what this decision is, which will see ZTE unable to export from American companies for seven years.