On Friday, ZTE, based in China, said that the ban by the U.S. on exports to the technology company could threaten its survival as well as adversely affect companies in the U.S.
Earlier during the week, the Commerce Department’s Bureau of Industry and Security placed what is called a denial of export privilege on ZTE. That means that firms in the U.S. cannot provide the Chinese tech giant with software or components.
ZTE uses Google software and Qualcomm components in its lineup of smartphones, amongst others.
On Friday ZTE said that the denial order would not just impact severely the development and survival of ZTE, but would cause damages to ZTE’s partners including a large number of companies in the U.S.
The statement continued by saying ZTE would not give up efforts to resolve this issue via communication and is determined, if deemed necessary, to take judicial measures in order to protect the legal interests and rights of the company, it shareholders and employees and fulfill obligations to its worldwide customer base, end users, and suppliers.
During 2017, ZTE admitted that it had illegally shipped telecom equipment to North Korea and Iran and agreed to penalties in the amount of $1.19 billion. However, the U.S. in 2016 said that while the investigation was going on, ZTE had made false statements in regards to disciplining employees who had been involved.
ZTE said that it took measures against the employees who might have been the ones responsible for that incident. It said as well that it introduced a compliance training program and in just 2017, spent more than $5 million in a compliance program for export control.
It is not acceptable that the U.S. Commerce Department insists on the unfairly imposing the severe penalty on the company even prior to the completion of investigating all the facts, ignoring ZTE’s diligent work and the progress it’s made on compliance with exports, said the company in its statement.
The episode with ZTE could risk escalating the trade disputes between China and the U.S. Both have traded threats of placing billions of dollars in tariffs but technology had been one area of particular contention.
Huawei, the third largest maker of smartphones in the world by market share, had a deal recently with AT&T to sell the company’s flagship handset in the U.S. that fell through.
Top intelligence chiefs in the U.S. warned people in the U.S. not to purchase any Huawei phones.