United States places trade embargo on Chinese telecom equipment maker

Optical Stocks Under Pressure After US Bans Sales To ZTE

US companies banned from selling components to ZTE

The seven-year ban has been placed on ZTE for violating the terms of a sanctions violation case, according to USA officials.

The Department of Commerce has now determined ZTE made false statements to BIS in 2016, during settlement negotiations, and 2017, during the probationary period, related to senior employee disciplinary actions the company said it was taking or had already taken.

ZTE made false statements to the U.S. Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation.

Now, the United States government has banned ZTE from using the hardware or software from the American companies. As a result ZTE paid up to $1.2 billion (£837 million) in fines. This egregious behavior can not be ignored.

Acacia Communications Inc, which earned 30 per cent of its total 2017 revenue from ZTE, tumbled as much as 34.7 per cent in early trade, hitting a almost two-year low.

Shares of optical companies including Lumentum Holdings Inc fell 6.6 percent and Finisar Corp dropped 2.7 percent.

ZTE didn't respond to calls seeking comment that were made after business hours in China.

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The cyber security watchdog - National Cyber Security Centre (NCSC) - has written to United Kingdom telecommunication firms warning of a national security risk involving equipment from Chinese telecom equipment maker ZTE Corp. It might also be the first steps through the bureaucratic box ticking mission to officially ban ZTE. "It's certainly going to make it very hard for them to produce and will have a potentially significant short and long-term negative impact on the company". For starters, it prevents the ZTE from buying hardware components from companies like Qualcomm and Intel. The company can resume purchasing these components from the USA after seven years.

Allowing Huawei, ZTE, and other related entities access to US government communications would be inviting Chinese surveillance into all aspects of our lives.

ZTE, which devised elaborate schemes to hide the illegal activity, agreed to plead guilty after the Commerce Department took actions that threatened to cut off its global supply chain.

The new restrictions stem from a January 16 report by a USA monitor appointed by a federal judge in Texas who accepted the guilty plea in March 2017.

The denial order against ZTE comes amid brewing tensions between the US and China that have raised concerns of a trade war between the world's two biggest economies.

Visitors pass in front of the Chinese telecoms equipment group ZTE Corp booth at the Mobile World Congress in Barcelona, Spain, February 26, 2018.

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