Back in April, as punishment for continued violations of a previous export ban settlement with the US, the US Department of Commerce’s Bureau of Industry and Security enacted a denial order against ZTE. The order effectively cut off the company off from receiving most US technology, and as a result of this ban, ZTE’s operations, which heavily relied on importing both hardware and software from the US, ground to a halt, putting the future of the company in doubt. However ZTE’s immediate woes now appear to be coming to an end; the Bureau of Industry and Security and ZTE have come to an agreement that will see the US tech ban suspended in return for a massive settlement, leadership changes, and allowing significant & ongoing US oversight of the company’s compliance.

Under the terms of the settlement, ZTE is paying an immediate $1B fine, on top of the existing $892M in fines they’ve already paid related to their misconduct in this case. Furthermore the company will have to completely clean house on its executive team and board of directors, replacing all of the members in both of those groups. Meanwhile to ensure ongoing compliance, ZTE is being required to put a further $400M in escrow, which would be forfeit if they violated US export regulations again. And the company will be required to host and pay for a US-selected compliance team that will oversee the company’s compliance over the term of the agreement.

In return, the US will be suspending – but not removing – the US technology export ban that has caused the company to grind to a halt to begin with. This would allow the US to quickly re-instate the ban if ZTE violates the terms of the 10 year agreement. Overall this an unprecedented agreement with the BIS in both the size of the fines and the overall scope of the compliance monitoring.

The immediate ramifications of this deal are that although ZTE is becoming cash-poorer, this will allow them to resume day-to-day business operations and get the business moving again. This includes once again being able to receive Qualcomm SoCs and the Android OS for their smartphones, along with the numerous components used in their networking gear.

There are also some political ramifications to this deal – which are outside the scope of AnandTech’s purview – but as the New York Times notes, many see this as part of a larger peace offering in ensuring a new trade deal between the US and China.

Source: US Department of Commerce

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  • close - Friday, June 8, 2018 - link

    Well it is selling out. Because "someone" made sure to scream that the US is not doing business with terrorist supporters. Now it turns out it's negotiable. So how does it look for the normal person when they realize it was nothing but populist talk and the real "reasons" just went in someone's pockets?

    I'll tell you, as a sell out.
    Reply
  • Yojimbo - Friday, June 8, 2018 - link

    The terrorist supporters have supposedly been kicked out. Corporations don't commit crimes, the people who head them do. Reply
  • jrs77 - Friday, June 8, 2018 - link

    American Imperialism at it's finest. Do as you're told or else...

    Sorry, but I don't want to the US to be the worlds overlords, especially not if half of the citizens reject scientific facts, are racist and are generally uneducated.
    Reply
  • B3an - Sunday, June 10, 2018 - link

    I hate Yankeestan as much as everyone else, but you just sound like a SJW. People like you with things like "muh racism/sexism/imperialism/patriarchy" is why they have an orange as president in the first place. Reply
  • jrs77 - Sunday, June 10, 2018 - link

    I hate people, who don't follow the scientific method, don't use reason and are incapable of forming an opinion due to the lack of education. That very much includes all those SJW snowflakes aswell.

    That's why I said half the US citizens and ot just the 60 million who voted for Trump. All the idiots who cheered for Hillary Clinton and are in support of the diversity-politics of the DNC are just as bad. And to be clear... it's not just the Trump-voters who are racist... it's a much bigger problem in the US.
    Reply
  • watzupken - Friday, June 8, 2018 - link

    I feel this is a win win situation for both US and China. US gain money in their coffers and favor from China, while ZTE remains in business and minimal job loss in China.
    There are people that are unhappy over supposed IP thefts, and I don't deny features and design tend to look too familiar for comfort at times. However, I do feel these China manufacturers are the ones that are keeping prices in check. Otherwise, we may have to fork out more than 999 bucks for the likes of an iPhone X or Google Pixel 2.
    Reply
  • 1prophet - Friday, June 8, 2018 - link

    Of course they keep prices in check, like the southern slaves did for northerners, god forbid you have to pay someone a living wage, benefits, have enforceable labor laws, have a good and safe workplace, and of course follow whatever environmental laws are required to keep your neighborhood safe from pollution, something most Americans believe is their right when they work for an employer,

    because that might mean you would have to pay 999 bucks or more for your precious iPhone X or Google Pixel 2.
    Reply

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