The US Government has come to an agreement with one of China’s largest OEMs, ZTE, allowing the company to continue business as usual. Considering ZTE was at its breaking point, this is super good news for the OEM, partners of the OEM, both countries, and fans. The compromise entails a $1 billion fine paid to the US Government, which is a lot of money for a small incident. Anyhow, the small incident almost costed ZTE its entire business so the company had just about no choice other than to settle.
After weeks of negotiating, President Trump and the US Government finally came to terms with ZTE just a few days ago. In case you missed what was going on, ZTE was in hot water for selling products to Iran and North Korea. The US government banned American companies from supplying components to ZTE as a result, which we reported on here. As compensation to overturn the ban that almost put them out, ZTE has agreed to pay a $1 billion fine and install new management and compliance teams chosen by the US. Moving forward, the company will continue its operations as usual and everyone will keep their jobs at ZTE’s expense.
Had the ban not been lifted, there would have been major implications for ZTE, its presence, and the remainder of the industry as we know it. There’s a good chance the company would have shut down and seized all activities, but moving ahead it appears things will work out okay. Nevertheless, the whole situation was controversial, surprising and unexpected in every which way. The compromise means nothing really for national security, which was an initial reason that lead to this all, so there’s that. And the US Government still recommends that US consumers stay away from buying Chinese products, because of spying on American citizens and corporations. It has been quite the ride and hopefully this marks the official end.
It has been all but rare, this year, to see the government involved in tech related news. First there was the blocked Broadcom acquisition and now this. For our sake, we hope this compromise means ZTE can continue making budget smartphones. It’ll be interested now to see if this shines any light on those trying to expand their products to the US.