Tuesday, 19 June 2018

ZTE signs preliminary agreement with US to overturn banning order

By Chris Kelly, Total Telecom
Thursday 07 June 18

ZTE will pay a huge fine and has made changes to its senior leadership team as part of the deal

ZTE has taken a huge step towards securing its own future, by signing a preliminary agreement with the US last night. Ultimately, the agreement will overturn a previous banning order that precluded ZTE from doing business with any US firm…

ZTE has taken a huge step towards securing its own future, by signing a preliminary agreement with the US last night.

Ultimately, the agreement will overturn a previous banning order that precluded ZTE from doing business with any US firm, on the grounds of it being a threat to US national security.

Once the full agreement is signed, ZTE would be able to restart its manufacturing process, which is heavily reliant on US components.

As part of the deal, ZTE will agree to pay a fine of $1 billion while also setting aside $400 million in escrow against any future transgressions.

ZTE halted its entire production operations last month, as the banning order looked certain to push the firm out of business. However, President Trump's last-minute intervention appears to have provided ZTE with a lifeline.

This week, ZTE announced major changes to its leadership structure, which many analysts believed was a US prerequisite for any potential deal.

ZTE is the fourth biggest manufacturer of smartphones in the world and has market leading positions in India and elsewhere in Asia.

ZTE and the US government are set to sign off on the full deal later this week, meaning that ZTE could restart production before the end of the month. 

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