Chinese telecom giant ZTE is reacting to penalties handed down from the US Commerce Department. In addition to fines that could exceed 1.2 billion dollars, ZTE is fighting for its financial future after getting hit with a seven-year ban on buying vital components from US companies. ZTE says the harsh penalty will not only hurt the world's fourth latest smartphone maker, it'll harm many US companies that profit from sales to ZTE. CGTN's Sean Callebs reports.

The U.S. took direct aim at ZTE for breaking a plea bargain. Last year, the company admitted to illegally shipped U.S. technologies to Iran and the DPRK, violating sanctions. ZTE promised to punish dozens of its executives. It didn't-triggering the ban. But, U.S. companies could be collateral damage.

Tao Zhang Dao ventures "This is probably like a lose-lose situation and a lot of U.S. companies are going to suffer, and U.S. consumers are going to suffer as well."

ZTE issued a response to the U.S. Commerce Department's decision to ban the sale of American-made parts and software to the company for the next SEVEN years. ZTE calls the move "unfair and "unacceptable" adding "the Denial Order will not only severely impact the survival and development of ZTE, but will also cause damages to all partners of ZTE including a large number of US companies." For example, nearly a third of sales from the U.S. optical networking equipment maker Acacia -came from China. Its stock has tanked Monday on the news. And, major players -such as Qualcomm, Intel, Microsoft and Google, could take severe hits, too.

Robert Weiss president, international tech law association "With google, it's definitely harmful because all of a sudden they may not have access to millions of customers in China."

Last year, ZTE sold around 19 million handsets here-doubling its U.S. market share to more than 11-percent. It made the United States ZTE's largest market. But now, it's clear that many U.S. companies will feel the bite. And, some experts warn things could get even worse down the road.

TAO ZHANG DAO VENTURES "This is definitely a wake up call to china, particularly considering a lot of the Chinese companies have a great reliance on U.S. side for components and technology."

If anything, the experts say this latest trade flare up between the U.S. and China highlights Chinese dependence on U.S. technology-most notably American-made semiconductors.

SEAN CALLEBS WASHINGTON "There is no question the ban has the potential to decimate ZTE -the company saying the decision basically has the company in a "coma." but, there are many telecom experts who believe the U.S. action is just the latest salvo in the ongoing trade conflict between Washington and Beijing. Many believe there's a chance - just a chance - that ZTE could negotiate a lighter penalty. Sean Callebs, CGTN, Washington."