Remember last year when it looked like the United States government was going to block ZTE from obtaining components from US suppliers?

Instead the Chinese smartphone maker has agreed to plead guilty to charges that the company violated US sanctions by selling products with American-made technology to customers in Iran and North Korea.

As part of the deal, ZTE will pay a $892 million fine.

The good news is that this means after paying the fine ZTE will be able to continue acquiring components from US suppliers. That means ZTE phones will continue to feature Qualcomm Snapdragon chips, among other things.

As Reuters reports, ZTE is pleading guilty to charges that the company shipped $32 million worth of items from the US to Iran over a 6 year period, including chips, routers, and servers. According to the US Justice Department press release, ZTE also “created an elaborate scheme to hide the data related to these transactions.”

There were also shipments to North Korea.

The agreement also includes an additional $300 million penalty on top of the  $892 million ZTE has already agreed to pay… but the additional penalty has been suspended so that ZTE will only pay it if the company violates its settlement agreement with the Commerce Department’s Bureau of Industry and Security.

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4 replies on “ZTE to pay $892 million to US after breaking Iran sanctions”

  1. That’s why critically important to every country have own technologies. And ZTE could be more cautious, create subsidiary company to work with those countries.

  2. Really, $892 million?

    According to Reuters (link below): “The settlement includes a $661 million penalty to Commerce; $430 million in combined criminal fines and forfeiture; and $101 million paid to the Treasury’s Office of Foreign Assets Control (OFAC). The action marks OFAC’s largest-ever settlement with a non-financial entity. ZTE also agreed to an additional penalty of $300 million to the U.S. Commerce Department that will be suspended during a seven-year term on the condition the company complies with requirements in the agreement.”

    So it seems to me like $661 + $430 + $101 = $1,192 million, plus $300 million that will be locked up as a liability for seven years.

    Also from the Reuters piece, this is interesting: “ZTE purchases about $2.6 billion worth of components a year from U.S. technology companies, according to a company spokesman. Qualcomm (QCOM.O), Microsoft (MSFT.O) and Intel (INTC.O) are among its suppliers.”

    Gee, what kind of “parts” is ZTE buying from Microsoft? I bet it’s some kind of “License” fee; perhaps “protection money” paid to keep Microsoft’s Patent Lawyer Goons off their back.


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