20 April 2018
| Alan Burkitt-Gray
ZTE has said that it might take legal action against the US authorities that have banned it from using US hardware and software.
The company does not give any details about the legal
avenues that may be open to it, but the threat comes at the end
of the first response from the company to this
week’s action by the US Department of Commerce
ZTE said it is "determined, if necessary, to take judicial
measures to protect the legal rights and interests of our
company, our employees and our shareholders, and to fulfil
obligations and take responsibilities to our global customers,
end-users, partners and suppliers".
ZTE is reeling from the DoC’s decision earlier this
week to declare it a "denied person", along with its
members of staff, agents and others. That means US companies
cannot license their chips, hardware or software to ZTE.
US companies previously identified as supplying ZTE –
either for onward sale to telecoms companies or enterprises, or
for internal use by ZTE – include Cisco, Dell, Intel,
Microsoft, Oracle, Qualcomm and Symantec.
The DoC imposed the order because it held that ZTE was not
taking action as agreed in early 2017 to reprimand
members of staff who were involved in smuggling systems to Iran – a country explicitly banned under the terms of
US export licences.
Now, in today’s statement, ZTE says that the move
was unfair as the company itself "self-identified the issues"
and reported the problems to the US Bureau of Industry and
The company said that it had established a team to monitor
export compliance. "Within ZTE, compliance is regarded as the
foundation and bottom-line of the company’s
operation," it said.
The company added: "ZTE has established a compliance committee
led directly by its CEO; built a global team of experienced
export control compliance experts; engaged several world-class
counsels and consultants to provide professional guidance in
order to establish and optimize ZTE’s export
control compliance structure, system and procedure; introduced
and implemented the SAP Global Trade System (GTS); organized
compliance training covering over 65,000 employees; cooperated
comprehensively with the independent monitor designated by US
government to ensure the monitor’s real-time and
transparent monitoring over ZTE’s implementation
of the relevant agreements with US government and applicable
export control compliance requirements, and provided over
132,000 pages of documents."
It said: "It is unacceptable that BIS insists on unfairly
imposing the most severe penalty on ZTE even before the
completion of investigation of facts, ignoring the continuous
diligent work of ZTE and the progress we have made on export
compliance." The company said that "a prestigious US law firm
has been engaged to conduct independent investigation".
It warned: "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 US
ZTE is one of the largest makers of smartphones in the world
and at least half of them have used Qualcomm chips. Both
Qualcomm and its rival, Intel, are now banned from supplying
ZTE for seven years.
The Reuters news agency reported this morning that China is
reacting to the news by stimulating its domestic semiconductor
market. It quotes an unnamed person familiar with the moves as
telling it: "In the last few days senior Chinese officials have
met to discuss plans to speed up the development of the chip
The agency also quotes the China-based Global Times newspaper
as saying: "China won’t allow the US to use chips
as a stick against it. China can take steps to replace
foreign-made chips with domestic. The Trump administration is
helping us Chinese make such a decision."
Department of Commerce,