United States hits ZTE with huge ban that has ominous Android implications

Visitors pass in front of the ZTE Corp. booth at the Mobile World Congress in Barcelona Spain

Visitors pass in front of the ZTE Corp. booth at the Mobile World Congress in Barcelona Spain

But US Commerce Department investigators said it made additional false statements multiple times about having taken action against the employees responsible, when it had not. ZTE has been buying the hardware from the USA companies and using in its products which are later shipped to Iran and North Korea.

According to Reuters, US manufacturers provide up to a third of the components used in ZTE's network equipment and smartphones, so this seven-year-ban could have a disastrous effect on the company's business. Likewise, the ban also means that that the maker of the popular Snapdragon processor is out a revenue stream for the next seven years. A five year long federal investigation concluded that the company had been buying USA components and using them in its own products, some of which had been distributed in Iran and North Korea.

ZTE suspended trade on the Shenzhen and Hong Kong bourses on Tuesday as it became engulfed in the controversy.

In addition to paying back a bunch of cash, ZTE promised the US government that it would formally reprimand its executives and deny them bonuses for executing this illegal activity. Other impacted companies include Lumentum Holdings, Finisair Corp, and Oclaro Inc, all of which do (or did) substantial business with ZTE.

ZTE officials did not immediately respond to requests for comment.

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Separately, the U.K.'s National Cyber Security Centre warned the country's telecommunications companies and regulator that national security risks from using ZTE equipment and services "cannot be mitigated".

ZTE was accused to circumventing US sanctions on Iran back in 2016. The company can resume purchasing these components from the USA after seven years.

ZTE paid $890 million in fines and penalties and agreed to take other steps but has not followed through, the commerce department said.

In the USA, government agencies are already prohibited from using equipment made by ZTE as well as by Huawei due to the risk of back doors and other cyber-threats being built into the firmware of the devices. ZTE also sells handset devices to United States mobile carriers. Qualcomm is perhaps the most recognizable name in the world of smartphone SoCs; the brand is the leader in the mobile silicon market, thanks in large part to the prolific use of its Snapdragon line of chips.

A senior official told reporters the department suspended export privileges for ZTE, meaning it can no longer receive United States components to incorporate into their products "to prevent them from furthering their illegal activities".

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