ZTE Corp. is facing the export restriction by U.S. government as they are considered to violated American sanctions against Iran.
The U.S. Commerce Department said on Monday that ZTE allegedly violated American sanctions against Iran by selling products that contained U.S.-made components such as chips and sensors to Iran.
The Department also said that the export restrictions would take effect on Tuesday. Suppliers to the company will then have to apply for an export licenses to send U.S.-made products to the company. ZTE’s U.S. suppliers include Qualcomm, Intel, IBM, Microsoft and Texas Instruments. However, all the application for the licenses will generally be denied, according to the U.S. Commerce Department, making it difficult for the china’s smartphone maker to buy American-made products.
“ZTE has been working with relevant U.S. government departments on investigations, maintaining constant communication with relevant departments and is committed to fully address and resolve any concerns,” Lunitta Lu, a spokeswoman for the company, said in an e-mailed statement. “ZTE strives to ensure all operational activities adhere to international trade practices and the laws and regulations of host countries.”
ZTE, China’s second-largest vendor of networking and a maker of smartphones, has expanded its smartphone business rapidly in the U.S. In the fourth quarter of last year, U.S. market accounted for 24 percent of the company’s global shipments, surpassing China as the biggest smartphones market for ZTE, according to research firm Canalys.
The export restriction will definitely hurt ZTE’s business in U.S. while the company aimed to challenge Apple and Samsung in the next three years.
“China expresses its strong dissatisfaction and resolute opposition [to the measure],” the Chinese Ministry of Commerce said in a statement. “The U.S. move will severely affect normal operations of Chinese companies. China will continue negotiating with the U.S. side on this issue.”