2018 has been a tricky year for Chinese smartphone makers such as Huawei and ZTE, with the latter catching the fallout from the US government designating Huawei as a threat to national security. After being issued a denial order against doing business with US companies back in April, it seems that ZTE could soon be up and running again after the company makes good on an agreement with the US Department of Commerce.
— U.S. Commerce Dept. (@CommerceGov) July 11, 2018
According to a tweet by the US Department of Commerce, ZTE can resume business with US suppliers once it deposits $400 million into an escrow account. This $400 million can be seized by the US Government if ZTE violates the 10-year suspended denial order. This is in addition to the $1 billion fine that ZTE paid to the US Treasury in June. Under the agreement, ZTE also had to change its board and management within 30-days and will operate with a 10-year suspended ban in place.
Once the order lifts, ZTE will be able to resume trading with US companies such as Qualcomm and restart its manufacturing process for its smartphones and networking equipment. While the denial order is set to be lifted, the US Senate could penalize ZTE still further with its amendment in the National Defense Authorization Act that has to go through the House before needing Trump’s signature to be ratified. Still, it’s a step in the right direction for ZTE.