Deal reached between the US and ZTE.

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Credit: Courtesy of ZTE Corporation

The US will end the ban on ZTE buying American software and hardware.

The terms of the deal require:
1. $1 billion penalty;
2. $400 million in escrow to be forfeited in the event of future export violations during the 10-year probationary period;
3. Compliance team in ZTE that will report to the company’s new chairman;
4. ZTE must change board and management team in 30 days.

Various online articles covering the US/ZTE deal ask what the US gets out of the ZTE deal.

None of the news sources mention that this deal saves ZTE and will lead to business for US suppliers of components and software to ZTE:

-Acacia Communications Inc
-Oclaro,
-Lumentum Holdings,
-FiberHome
-NeoPhotonics Corp
-Inphi Corp
-Finisar Corp
-Analog Devices Inc
-Xilinx Inc
-Qualcomm
-Qorvo Inc.
-Alphabet Inc

If you or anyone you know has questions about the ZTE deal or export compliance questions, feel free to contact experienced trade attorney, David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.

ZTE facing $1.7 billion penalty?

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Photo by Luke Hui on Pexels.com

Reuters reports the Trump administration may seek a penalty up to $1.7 billion from ZTE. In addition to the hefty fine, the U.S. Department of Commerce is also seeking unrestricted access to sites to verify US components are being used as claimed by ZTE.

As previously mentioned on this blog, ZTE is banned from purchasing from US hardware and software suppliers for 7 years due to violating U.S. export controls. This ban would severely limit ZTE’s ability to make phones as US companies provide 25-30% of the components in ZTE equipment, with ZTE paying over $2.3 billion to US suppliers.

As the penalty can change anytime – check back for more updates.