US Government Granted ZTE Temporary Relieve on Export Restriction

By Staff Writer

Mar 24, 2016 07:43 AM EDT

U.S. government has lifted an export restriction for ZTE temporarily. The decision was announced on Tuesday by U.S. Commerce Department.

On March 8, the United States Commerce Department placed the toughest export restriction on ZTE for exporting technology components to Iran. The Chinese company was accused to develop a scheme to re-export controlled items to Iran and violating United States law along with three affiliate entities: ZTE Kangxun, Beijing 8-Star, and ZTE Parsian

Following the restriction, all U.S. companies that supply components to ZTE must acquire export license first before shipping their products. The restriction also prevented U.S. software companies to sell applications to ZTE, and even forbidden to provide updates. This will cripple the ZTE business and its U.S. suppliers as well, because ZTE depend on chipsets and components made by American suppliers.

On Tuesday,as Reuters reported, U.S. government has given a three-month reprieve on tough export restrictions to ZTE. The temporary relieve will be extended as long as ZTE perform undertakings and cooperates with the U.S. government in resolving the matter.

Chinese Foreign Ministry spokeswoman Hua Chunying praised the decision. She expected the issue will be resolved soon and the sanction will be lifted completely. In a daily news briefing in Beijing she said, "We hope both parties appropriately resolve the issue via continuing to have dialogue and consultations,"

On Sunday, a senior U.S. Commerce Department has told Wall Street Journal regarding the temporary relieve. The official said, "As part of the effort to resolve the matter, and based upon binding commitments that ZTE has made to the U.S. government, Commerce expects this week to be able to provide temporary relief from some licensing requirements."

Following the temporary relieve, the Shenzen-based company pledged to keep working with U.S. government. A ZTE spokeperson told Xinhua in an interview that it will continue to invest heavily in its core technology. ZTE will also and manage the company according to regulations to ensure healthy development.

Currently ZTE holds 7% of the smartphone market in the United States, placing the company as the fourth-largest smarphone maker in the U.S. just behind Apple, Samsung and LG. ZTE is also the sponsor of Golden State Warriors, the current NBA champion, and four other NBA teams: Cleveland Cavaliers, Chicago Bulls, New York Knicks, and Houston Rockets.

The telecommunication company is famous for its research and development and hold more than 13,000 patents. In two consecutive years, 2011 and 2012, World Intellectual Property Organization (WIPO) has declared ZTE as the number one in patent application in the world. In the U.S., ZTE has established 6 research centers, along with 14 offices.

As United States has granted a three-month reprieve, ZTE will continue to work with the U.S. government. ZTE will keep investing in its core technology and manage the company to follow the regulations.

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