The U.S. Commerce Department extended a reprieve from export restrictions to ZTE Corp. through August 30, allowing the Chinese electronics vendor to continue exporting products that include U.S. technology.
U.S. authorities placed the restrictions on ZTE in March for allegedly violating American export controls on Iran. The move required ZTE's suppliers to apply for an export license before shipping any U.S.-made equipment or parts to ZTE, and reports indicated those applications would "generally be denied."
Just two weeks later, though, the Commerce Department temporarily lifted the restrictions following talks between the government and ZTE that were described as "active" and "constructive." The restrictions "would be maintained only if ZTE is abiding by its commitments to the U.S. government," an unnamed official said in one news report.
The Commerce Department announced Monday that the temporary reprieve was pushed back to the end of August. It had been scheduled to expire at the end of June.
The export restrictions, which were said to be some of the toughest ever set in place, essentially would have prohibited U.S. companies from exporting software or hardware made in America to ZTE. That could have been enormously disruptive for the company's supply chain – in April the sanctions prompted ZTE to lower the 2015 net profit it had posted in a preliminary report – but also for the U.S. companies that ZTE relies on for 43 percent of the components and services it sells. So the restrictions would have surely had a negative impact on American companies such as Qualcomm (NASDAQ:QCOM), Broadcom and Intel.
ZTE was the fourth-largest smartphone vendor in the U.S. in March, according to Counterpoint Research, and has emerged as the only Chinese brand with substantial U.S. sales. But the company has something of a dubious history regarding its export policies. The Commerce Department investigated ZTE for alleged export-control violations in 2012 following reports it had inked deals to ship hardware and software from American tech businesses to Telecommunication Co of Iran (TCI), that country's largest telecom operator.
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