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White House lifts ZTE ban. But there’s a catch!

The US Commerce Secretary Wilbur Ross said that the US government has entered into an agreement with Chinese telecom giant ZTE and ended its ban. Under the deal terms, ZTE will pay $1 billion to the US as penalty amount, and it will also pay $400 million as an advance amount, which will be deprived of if the smartphone maker breaches the rules in the future.

In an interview to CNBC, Ross added that the US admin had compelled to make changes to ZTE’s management and board in a month’s time as well as allow a team from the US to overlook the company. Ross also stated that the ZTE deal would not affect US-China trade talks by any means.

Last year, ZTE has been accused of breaking the US sanctions against North Korea and Iran and in March 2017, ZTE agreed to cop a plea and pay $1.19 billion as a penalty for doing illicit shipping of telecom accessories to North Korea and Iran. In April 2018, the US Department of Commerce enforced a seven-year export ban on ZTE, which didn’t allow the US companies selling accessories to ZTE. This ban made the telecom company to almost defer its operations.

This deal is expected to make way for the Qualcomm’s (QCOM) acquisition of NXP Semiconductors (NXPI). Both the companies were up about 5% when the market opened today. Also, shares of technology companies like Acacia Communications (ACIA) and Lumentum Holdings (LITE) opened in the green but lost the momentum later.

Meanwhile, last month President Trump tweeted that he is working with his Chinese President Xi Jinping to bring back ZTE into action again. The decision of lifting the ban against ZTE has been criticized by both Democrats and some of the Republican Party members and many had expressed their concerns about US national security.

Also Read:  Earnings calendar for the week of Oct. 19

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