It emerged that the US Department of Congress has banned American companies from selling components to Chinese telecoms equipment maker ZTE.
ZTE has suspended trading in Hong Kong and Shenzhen as a result of the bans imposed by the United States and the UK.
For ZTE itself, the latest USA action means one of the world's top makers of smartphones and communications gear will no longer be able to buy technology from American suppliers, including components central to its products. The company actually handed out bonuses to those employees that acted illegally, except for four that it fired.
The latest NCSC warning about ZTE coincides with the announcement of a seven-year ban on United States companies selling products and services to ZTE due to its alleged failure to act against personnel who sold sensitive U.S. technology to Iran and North Korea, according to The Guardian. (NYSE:S), and "has relied on US companies including Qualcomm Inc, Microsoft Corp and Intel Corp for components", according to Reuters. Other impacted companies include Lumentum Holdings, Finisair Corp, and Oclaro Inc, all of which do (or did) substantial business with ZTE. It also agreed to a seven-year suspended denial of export privileges, which allowed it to keep sourcing American parts. Qualcomm declined to comment on the matter, while Acacia did not respond to an inquiry. The biggest stinging point of this ban lies in ZTE's loss of access to Qualcomm components, including the Snapdragon line of SoCs.
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. "Many banks and companies even outside the USA are not going to want to deal with them", said Eric Hirschhorn, a former U.S. undersecretary of commerce.
The UK's national cyber-security agency has warned telecoms companies not to use equipment or services from China's ZTE, saying to do so would harm the country's national security. It has a small but rising share of the smartphone business in the US. ZTE may have lied about all of that too, which is what pissed off the USA government.
What's more, earlier this year, a senior official in President Trump's administration confirmed earlier this year USA government is considering developing its own 5G network, containing parts manufactured in China, to counter, er, security threats from China. The inability to export components from the U.S.to build its carrier and cloud equipment would seriously impact ZTE as well.