Business
09:33, 26-May-2018
Trump administration reaches deal to keep ZTE in business
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The Trump administration has briefed US lawmakers about the outlines of a deal to put Chinese telecommunications company ZTE back in business, Reuters reported on Friday citing a senior congressional aide.
The deal, communicated to officials on Capitol Hill by the Commerce Department, requires ZTE to pay a substantial fine, place US compliance officers at the company and change its management team, the aide said.
The Commerce Department would then lift an order preventing ZTE from buying US products.
Last month, the Commerce Department announced a seven-year ban on US companies selling parts to ZTE for alleged violations of the US sanctions against Iran and the Democratic People's Republic of Korea (DPRK).
US President Donald Trump on Tuesday floated a plan to fine ZTE up to 1.3 billion dollars and shake up its management as his administration considered rolling back more severe penalties that have crippled the company.
ZTE agreed last year to pay nearly 900 million US dollars in penalty fees and open its books to a US monitor for allegedly breaking a 2017 agreement.
The company has lost over three billion dollars since the April 15 ban on doing business with US suppliers, said ZTE.
Based in the southern Chinese city of Shenzhen, ZTE is a leading global provider of telecom equipment, networking solutions and one of the world's fastest-growing smartphone manufacturers. The firm needs US components for its mobile phones and network equipment.
US companies provide an estimated 25 percent to 30 percent of components in ZTE’s equipment.
Now the company would be allowed to resume business with US companies, including chipmaker Qualcomm Inc.
Shares of ZTE’s US suppliers traded higher on Friday. Optical networking equipment maker Acacia Communications Inc, which got 30 percent of 2017 revenue from ZTE, rose by 4.4 percent. While shares of optical component company Oclaro Inc, which received 18 percent of its fiscal 2017 revenue from ZTE, were up by 2.7 percent.