U.S. extends ZTE's reprieve from export restrictions

The U.S. Commerce Department once again extended a reprieve from export restrictions for ZTE Corp., allowing the Chinese electronics maker to continue to work with U.S. technology suppliers until at least Nov. 28.

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."

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, Broadcom and Intel.

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The U.S. government temporarily lifted the restrictions just two weeks after announcing them earlier this year, citing talks with the company 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.

ZTE was the fourth-largest smartphone vendor in the U.S. last year, although the company appears to be struggling in recent months as American carriers have cut back on premium phones from vendors other than Samsung and Apple.

ZTE 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.

The vendor has spent $5.1 million on political lobbying in the United States since 2012 in an effort to address national security concerns and discuss matters including trade relations, supply chains and cyber-security issues. Among its lobbying targets have been legislators in both the House and Senate, the Department of Homeland Security, the Department of Commerce, the State Department and the National Security Agency.

The Commerce Department could extend the temporary relieve beyond Nov. 28, the Wall Street Journal reported, but it may also agree to settle the matter in a move that would likely involve ZTE accepting penalties and pledging to comply with U.S. laws.

For more:
- see this U.S. government ruling
- read this Wall Street Journal report

Related articles:
U.S. extends reprieve from export restrictions to ZTE
Report: U.S. to 'temporarily' lift ZTE export restrictions
ZTE's Lam: Company shines in U.S. prepaid device market with 21% share

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