Published: Fri, June 08, 2018
Markets | By Josh Butler

It’s official: ZTE will be back in business soon

It’s official: ZTE will be back in business soon

Ross told CNBC that ZTE will pay the USA a $1 billion fine and put $400 million in an escrow account.

In addition to the fine, ZTE has to allow unfettered site visits from the USA to make sure products are being used as claimed, post calculations of the USA components it uses to a public website, and also replace its board and executive team within 30 days.

Washington lawmakers were indignant last month after Trump offered to rescue ZTE as a personal favor to Chinese President Xi Jinping - even though the company is widely considered a liability for U.S. national cyber-security.

US companies could soon be cleared to do business with China's ZTE, according to Reuters.

The measure was introduced hours after Commerce Secretary Wilbur Ross announced that the USA had agreed to lift the seven year ban on us companies selling components and software to ZTE.

The ban in effect nearly destroyed ZTE as it now relies on many components from American companies. Both companies' share prices rose Thursday, with NXP up more than 6 percent in midday trading. The Chinese authorities' involvement, on the backdrop of ongoing trade negotiations with the US, have saved ZTE from almost-certain death.

The Congress members who introduced the bill, as well as the intelligence agencies that flagged ZTE and Huawei hardware as risky, believe that Chinese devices could contain spyware and backdoors that could be a threat to national security. It may also need Beijing's help to strike a deal with North Korea as Washington and Pyongyang plan a high-profile meeting on June 12 in Singapore. Since the original US penalty would have put ZTE out of business, Chinese authorities would have retaliated against a prominent USA company, he said.

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"I closed it down then let it reopen with high-level security guarantees, change of management and board, must purchase USA parts and pay a $1.3 Billion fine", Trump wrote on Twitter on May 25.

Ross called ZTE's actions a "world-class embarrassment", and said that the US deal with ZTE imposes the "most strict" compliance ever on any company.

Under the terms of the settlement, ZTE is paying an immediate $1B fine, on top of the existing $892M in fines they've already paid related to their misconduct in this case.

Rubio alluded to Trump's steel tariffs, but the Florida senator hasn't been more vocal since Trump levied those - an issue that is playing out in Florida. "The Chinese public was up in arms because they believed the USA was destroying ZTE".

Trump met with his trade advisers on Tuesday to discuss China's offer to import an extra $70 billion of American goods over a year in hopes of defusing a potential trade war between the world's two largest economies.

ZTE's major markets are communications networks (which would include 5G networks now under development), IOT ("internet of things"), big data and cloud-computing products, according to the annual report.

"The hope is accommodating China's concerns on ZTE will open the door to favorable decisions on Qualcomm and other deals", said Altbach. NeoPhotonics (NPTN) rose 1.6% to 7.15, while Oclaro (OCLR) climbed 1.4% to 9.18.

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