The U.S. Department of Commerce announced that companies can no longer sell components to ZTE amidst allegations of dishonesty.
It seems that trade relations between the US and China in the teleco industry is not getting any better. After US companies cut ties with Huawei, ZTE now faces a similar issue.
The Chinese telecommunications giant has been denied of export privileges after the Commerce Department has imposed a ban on them. US companies can no longer sell any products or services for seven years to ZTE following a violation.
In March 2017, the China-based company pleaded guilty for illegally shipping US equipment to Iran and North Korea. In the plea agreement, it promised to pay $1.2 billion in penalties and take actions against the employees involved.
According to the Commerce Department, company officials lied about reprimanding the employees.
“Instead of reprimanding ZTE staff and senior management, ZTE rewarded them,” Commerce Secretary Wilbur Ross said in a statement on their website. “This egregious behaviour cannot be ignored.”
The company was supposed to to fire four senior employees and discipline 35 others. However, the company only fired the four staffers but did not take any action against the others.
With the ban in place, Qualcomm and Dolby both of whom operate in the US, will no longer be able to supply the company.