US Reaches Deal With China's ZTE - Secretary of Commerce

US Reaches Deal With China's ZTE - Secretary of Commerce

US Reaches Deal With China's ZTE - Secretary of Commerce

After a personal plea from Chinese President Xi Jinping to help the company get back into business, President Donald Trump said last month that the initial fine on ZTE would lead to "too many jobs in China lost" and that he would direct his Commerce Secretary to "get it done".

The President said the company would have to pay a $1.3 billion fine and change management for the ban to be lifted, and a few days ago, ZTE reportedly reached an agreement with the Department of Commerce. "This new settlement agreement sets another record, and brings the total penalties assessed on ZTE to $2.29bn".

A Commerce Department spokesman said on Tuesday that "no definitive agreement has been signed by both parties". The Trump administration had previously announced that it was banning USA companies from selling ZTE components for seven years, components critical to its entire product line.

Democrat and Republican senators denounced Trump's offer to ease the ZTE sanctions as an offer that imposed punitive measures the company had already disregarded once before, while garnering no true concessions from China. He later tweeted that the ZTE talks were "part of a larger trade deal" being negotiated with China.

The US has reached a deal with Chinese tech firm ZTE that will remove the ban on the company buying parts from US suppliers, Commerce Secretary Wilbur Ross has said. The ban on software also cut off millions of ZTE users from updating their Google Android operating systems.

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.

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Ross touted the deal as a victory, saying the administration's previous strict actions accomplished its goal in that it "brought ... a $17 billion company to its knees more or less put them out of business" and that the new agreement is "something I think even more effective". "It's unprecedented to have USA agents as monitors ..." "I hope it means something good to us, but we are really focused more on our individual application", Mollenkopf told a corporate governance conference in NY. The U.S. government has not signed the deal yet, however, ZTE has agreed to a previously drawn up deal.

US chipmaker Qualcomm has been trying to buy NXP Semiconductors of the Netherlands, but given the company's global reach, the deal had to be approved by numerous countries' antitrust regulators, including China's.

But it came shortly after Chinese officials offered to buy an additional $70 billion in U.S. goods to cut the trade deficit, moving toward meeting one of Trump's central demands on trade. That was a potential death blow to ZTE, which relies on US technology for an estimated 25 to 30 percent of its components. "The ZTE case was a thorn in the side for China ..."

Acacia Communications shares are up 4.9%.

"The hope is accommodating China's concerns on ZTE will open the door to favorable decisions on Qualcomm and other deals", said Altbach.

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