The United States Department of Commerce (DOC) has just announced a ban on U.S. exports to ZTE, which means that the Chinese manufacturer will no longer be able to use technology or components from companies such as Dolby or Qualcomm, including the renowned Snapdragon processors.
The ban could prove devastating to ZTE since U.S. companies supply up to 30pc of components used in ZTE equipment that features in smartphones and broadband modems.
This warning follows similar action from the United States government, which has long-prohibited American telecoms firms from buying network equip from Chinese firm Huawei, and last month went so far as to warn U.S. citizens not to use smartphones from the Chinese companies Huawei and ZTE.
In 2017, the USA government entered into a $1.19 billion settlement agreement with ZTE regarding their violation of sanctions by selling Iran and North Korea goods originating from the United States.
Following the guilty plea, the company agreed with the USA government to pay $890 million (€720 million) in penalties and fire four senior employees and discipline 35 others, a Commerce Department spokesman told Reuters news agency. It did the former, but omitted the latter.
The US government's assault in Chinese electronics makers continued today with news that the US had slapped ZTE with a 7-year ban for violating an agreement between the two. Instead of reprimanding ZTE staff and senior management, ZTE rewarded them.
It's believed that BT has an R&D partnership with the Chinese firm, and has distributed routers made by the company, but is playing down its relationship.
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"Adding in new equipment and services from another Chinese supplier would render our existing mitigations ineffective", FT reported.
Warning that protecting a network from a malicious equipment depends on using other vendors that are not as risky, the NCSC said the risk of both Huawei and ZTE was too much.
On the consumer devices side ZTE makes heavy reliance on Qualcomm SoCs to power their smartphone products.
ZTE under suspicion: The Chinese company has raised concerns among USA lawmakers about how independent it is from the Chinese government.
Ross, Jr., the US Secretary of Commerce, has said that ZTE Corp. The categories that would most impact ZTE are items falling under categories 3, 4 and 5; Electronics Design Development and Production, Computers, and Telecommunications & Information Security.
The restrictions ban United States companies from selling hardware and equipment to China's ZTE.
"The U.K. telecommunications network already contains a significant amount of equipment supplied by Huawei, also a Chinese equipment manufacturer", NCSC said in a statement.