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The ZTE Department of Commerce Monitor: uncharted waters

Tom Fox | June 10, 2018

The Department of Commerce announced a resolution of its sanction against Chinese entity ZTE, which had appeared to put the company’s future existence in jeopardy. That sanction was an export denial barring American companies from selling components to ZTE and its subsidiary, ZTE Kangxun Telecommunications Ltd. American companies, such as San Diego-based chipmaker Qualcomm, supplied critical parts for its networking gear and smartphones. This sanction came on the heels of an $891 million fine and penalty the company agreed to in March 2017 for its first round of export control violations. The second sanction was for failing to live up to the terms of the DPA the company agreed to in 2017. 

In 2017, ZTE agreed to a monitor, who was appointed by the District Court in line with the company’s guilty plea. Under the May 2018 supplemental sanction, ZTE agreed to pay an additional $1 billion in penalties, put $400 million in escrow, and accept a U.S.-appointed compliance department...

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