ZTE has hit back at the US Department of Commerce's "denial order" that bans US component firms from selling to the Chinese vendor for seven years, calling the decision "unfair", saying it will "severely impact the survival and development of ZTE" and stating it could "take judicial measures to protect the legal rights and interests of our Company, our employees and our shareholders".
Today, ZTE said the ban on the sale of parts and software to the company was unfair and threatens its survival.
"The Denial Order will not only severely impact the survival and development of ZTE, but will also cause damages to all partners of ZTE including a large number of U.S. companies", ZTE said in a statement.
The US Commerce Department imposed the ban on Monday.
The Shenzhen-based company, the biggest listed Chinese telecommunications equipment provider, was banned from purchasing goods and services from United States companies for seven years after it did not fully comply with the terms of a 2016 settlement for violating U.S. trade sanctions against Iran and North Korea.
Chinese smartphone maker ZTE Corp's USA woes deepened on Tuesday, as regulators proposed new rules that could cut into its sales, while a supply ban means it may not be able to use Android software in its devices, according to a source.More news: P&G to buy German Merck's consumer health unit for $4.2 bln
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Citing an internal memo dated March 8, the source said Cheng Gang, ZTE's chief compliance and chief legal officer, was "removed from his posts" more than a month ago, although that the memo did not give a reason for the action. China's second-largest telecoms equipment maker said in a statement.
"It is extremely unfair to ZTE and we can not accept it!"
As part of the settlement for violating trade sanctions on Iran and North Korea, ZTE had agreed to pay US$1.2 billion in penalties to the USA government in return for a suspended seven-year ban during a probationary period. It eventually pleaded guilty at the time, agreeing to pay $900 million in fines for violating usa sanctions.
Intensifying the trade war, the U.S. Treasury is looking for ways to restrict sensitive Chinese investments in the United States by invoking an emergency powers law and bringing forward some security review reforms for corporate acquisitions, a senior Treasury official said on Thursday. It pointed out that last year alone it spent more than $50 million on its export compliance program, and is planning to boost that level this year.
Tensions between the US and China are at the highest level in years.
It's also worth considering that ZTE won't have much trouble finding other suppliers, and that China has encouraged its own semiconductor industry to smarten up.