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ZTE Just Dealt Major Blow by US

Andrew E. Freedman Senior Writer

ZTE is going to have some trouble making phones for the United States. The Chinese company was just hit by a ban on American exports from the Department of Commerce.

Farysa Hamza/Shutterstock.com

Farysa Hamza/Shutterstock.comThat ban will keep ZTE from getting parts from U.S.-based suppliers such as Qualcomm, Intel, Microsoft and Dolby for seven years. Qualcomm is perhaps the biggest loss for ZTE, as it will be difficult to make phones that work in the U.S. without the mobile processor platforms Qualcomm builds. (There are other processors that should work fine on spectrum in Europe and Asia.) It's unclear how this will affect upcoming phones from ZTE.

This comes as punishment for illegally shipping telecommunications equipment to Iran and North Korea. As part of a plea deal, ZTE was supposed to reproach any employees involved and revoke bonuses. But according to the Department of Commerce, bonuses were paid in full. The company paid monetary fines, and also agreed that it would give up its export rights if it failed to rebuke its employees. Now, the U.S. is pulling the trigger.

"ZTE made false statements to the U.S. Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation," Secretary of Commerce Wilbur L. Ross, Jr. said in a statement.

Tom's Guide has reached out to ZTE for comment, and will update if we hear back.

The move could have repercussions for budget phone shoppers. While ZTE makes a range of models, it's made particular in-roads in the U.S. with budget handsets that are sold through discount and prepaid carriers.

Chinese phone companies have been under increased scrutiny lately. U.S. intelligence agencies have cited potential Chinese espionage as a concern, causing carriers to back out of selling Huawei's Mate 10 Pro. We did a deep dive on Huawei and ZTE, and while governments certainly see the phones as a risk, there is little evidence that ZTE and Huawei are spying on you, specifically.

See also : 15 Cheap Smartphones (Under $200) Ranked Best to Worst