US companies barred from selling phone parts to China’s ZTE for seven years

In a hammer blow to many American companies manufacturing parts for smartphones and other telecoms equipment, the US Department of Commerce has banned native firms from selling to Chinese giant ZTE.

A massive producer of telecoms devices and network equipment, including smartphones for many leading brands, ZTE is a key customer for numerous US manufacturers, in some cases accounting for 25-30% of revenue.

The ruling was enforced after ZTE was found guilty of illegally selling goods into Iran and North Korea, breaking an agreement it struck with the American government.

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The Chinese firm has already paid out $890mn in fines and could face another $300mn penalty. ZTE also agreed to sack four senior employees linked to the scandal.

Secretary of Commerce Wilbur Ross said: “ZTE made false statements to the US Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation.

“ZTE misled the Department of Commerce. Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behavior cannot be ignored.”

Last month ZTE recorded reported 2017 revenue of $17.33bn in 2017, a 7.5% jump on the previous year.

Away from its core device manufacturing, the company says it is devoting itself to emerging technologies such as the internet of things, chips, cloud computing, and big data.