ZTE reportedly in 'constructive' discussions over U.S. export restrictions

ZTE is in "constructive" discussions with U.S. regulators to lift export restrictions imposed last week, according to a Reuters report.

The U.S. Commerce Department last week began requiring the Chinese manufacturer's suppliers to apply for an export license before shipping any American-made equipment or parts to ZTE. The company allegedly violated U.S. export controls on Iran, and the sanctions threaten to disrupt ZTE's worldwide supply chain.

The two sides are now "in ongoing discussions," according to an unnamed Commerce Department official quoted by Reuters, and hope to resolve the matter. Export restrictions can take a year or longer to be lifted, although regulators may act more quickly.

ZTE relies on U.S. companies for 43 percent of the components and services it sells, according to a recent Bloomberg report, and its American partners include heavyweights such as Qualcomm, Broadcom and Intel. So while the restrictions are sure to cause supply problems for ZTE, they're also likely to have a negative impact on the bottom line of its U.S. suppliers.

ZTE has gained gradual ground in the U.S. smartphone market and last year became the fourth-largest vendor in America. The company recently said it expected to report a 43.5 percent increase in full-year net profit for 2015.

But the company is no stranger to questions 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.

ZTE has spent $5.1 million during the past four years in an effort to address national security concerns, according to Reuters, citing congressional lobbying records. The company's lobbyists have reportedly contacted legislators in both the House and Senate as well as the Department of Homeland Security, the Department of Commerce, the State Department and the National Security Agency to discuss trade relations, supply chains and issues regarding cyber security.

For more:
- read this Reuters report

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