The U.S. Commerce Department has lifted its ban on U.S. companies doing business with Chinese phone and telecom equipment maker ZTE. The company can now resume operations, after all but shutting down since April due to the ban. The company is highly dependent on U.S. companies, including Qualcomm and Google, for its smartphone chips and software. The deal to lift the ban was done at the instruction of President Trump, and includes a $1 billion fine and a complete change of ZTE leadership. Today's action marks the end of a years-long saga that started when ZTE was caught selling equipment to North Korea and Iran in violation of a U.S. embargo.
ZTE has now replaced four of its top leaders (CEO, CFO, CTO, and head of HR) and its entire board of directors, as required by a tentative deal with the U.S. government. The company has also agreed to pay a $1 billion fine. With these steps complete, the U.S. Commerce Dept. may soon lift the sales ban that has forced the company to suspend all operations since April. In the meantime, the government has granted ZTE a one-month waiver allowing it to resume providing support for its products for the month of July. While ZTE is Chinese company, it is highly dependent on U.S. suppliers — including Qualcomm and Google — which is why the Commerce Dept.'s ban on doing business with U.S. companies has effectively shut down the company. The deal to lift the ban was announced last month, and has President Trump's strong support. In Congress, the Senate version of a pending defense-policy bill would override the Commerce Dept. and keep the sales ban in place. The House version of the bill does not contain that language, a difference that remains to be reconciled.
ZTE is nearly ready to install a new board of directors, a step required by the U.S. Department of Commerce if the company wants to end the ban on U.S. supplies. The company held its annual general meeting in Shenzhen this week where shareholders voted on this and other matters. ZTE is expected to name eight new members to its board. In April, the Commerce Department banned ZTE from using U.S. parts and software, crippling the company. On June 7, the Commerce Department said it would end the ban as long as ZTE pays $1 billion fine, puts $400 million into escrow, and replaces its leadership. In addition to the new board, the Commerce Department wants all executives at or above the senior vice president level to be fired, along with any execs who played a role in the wrongdoing. ZTE will also have to put in place a U.S.-appointed compliance officer. The company has already paid the $1 billion fine. Once all these steps are taken, ZTE will have met the Commerce Department's conditions. Even if it does, it is unclear when the company might be allowed to get back to business. A number of senators and congressmen want the ban to remain in place. Since the ban went into effect, ZTE has been largely idle. Its shares have dropped 60%, erasing $11 billion from its valuation. The new board may be voted in as soon as today.
ZTE has taken the first step toward resuming operations by forking over $1 billion to the U.S. Department of Commerce. The fine is part of a new agreement the company reached with the government in an attempt to end the destructive ban that prevents it from buying U.S. software and hardware. ZTE still has to put $400 million into escrow and rearrange its top leadership, which are also aspects of the agreement. ZTE will lose the $400 million if it skirts the rules again. The company was punished for breaking a 2017 settlement over illegal sales to Iran and North Korea. ZTE misrepresented to U.S. officials how it handled portions of that earlier settlement. The Commerce Department then banned ZTE from using U.S. products for a period of seven years, which has effectively forced the business to cease operations. The new agreement was brokered by the Trump administration, but it is encountering resistance from members of Congress. It's unclear if or when the Trump administration and Congress will reach a final agreement over the company's fate.
ZTE will be the topic of discussion at a meeting today between President Trump and members of the Senate and House of Representatives, reports Reuters. Trump wants to talk about the "problematic" amendment made to the National Defense Authorization Act (NDAA) earlier this week, which will keep certain sanctions against ZTE in place. The administration and lawmakers have different viewpoints on what to do with ZTE. The company was caught lying about a 2017 settlement over exports to Iran and North Korea in violation of sanctions. As a result, the Department of Commerce banned U.S. companies from selling ZTE software or hardware for a period of seven years. The ban has effectively put ZTE out of business, as it is unable to buy the components it needs to make phones. The Trump administration wants the ban lifted and the Commerce Department agreed to a new fine along with required management changes at ZTE. Members of the Senate and House, however, contend that ZTE's punishment was fair and should be upheld. Despite the Commerce Department agreement, Senators added language to the NDAA that keeps the sanctions in place, putting it at odds with the Trump administration. The White House confirmed that the meeting will take place, but did not specify the attendees.
The Senate approved legislation that would see the ban against ZTE remain in place. The chamber on Monday voted in favor of the National Defense Authorization Act (NDAA), a bill passed by the Senate every year. Republican Senator Tom Cotton and Democratic Senator Chris Van Hollen introduced a measure to the bill earlier this month that restores the penalties against ZTE. ZTE was sanctioned for violating the terms of a 2017 settlement agreement over unlawful sales to Iran and North Korea. Beginning in April, the company was cut off from U.S.-made hardware and software for a period of seven years. The company has largely been idle since. The Trump administration sought to help ZTE and the Commerce Department reached an agreement with the company. Under the terms of the arrangement, the Chinese phone maker must pay a $1 billion fine, put $400 million into escrow, wholly change its top leadership within 30 days, an accept a U.S.-led compliance officer. Now that the NDAA has passed in the Senate, it has to be reconciled with the House of Congress' version of the NDAA and later signed by the President. It's unclear how the Senate, House, and President will resolve the issue.
The 3GPP today ratified another piece of the 5G specification, termed the Standalone 5G New Radio, or SA 5G NR. This spec is for 5G networks that are developed on their own, apart from legacy or pre-existing networks. The Non-Standalone portion of the 5G spec was ratified late last year and covers 5G that hooks into existing LTE 4G systems. "The freeze of Standalone 5G NR radio specifications represents a major milestone in the quest of the wireless industry towards realizing the holistic 5G vision," said BalÃ¡zs BertÃ©nyi, chairman of 3GPP RAN. "5G NR Standalone systems not only dramatically increase the mobile broadband speeds and capacity, but also open the door for new industries beyond telecommunications that are looking to revolutionize their ecosystem through 5G." The SA 5G NR and the NSA 5G NR standards will together include the technology used by commercial entities, the air interface, and end users. The spec was approved by more than 600 delegates from the world's leading carrier, handset, and silicon vendors. Some participants included AT&T, DISH, Ericsson, Huawei, Intel, Kyocera, LG, MediaTek, Nokia, Qualcomm, Samsung, SoftBank/Sprint, Sony, Verizon, Xiaomi, and ZTE. The 3GPP said the technical specifications for the ratified SA 5G NR will be published in the days ahead.
ZTE's roller-coaster ride with the U.S. government has taken another turn. The Senate may vote on legislation this week that would negate the Trump administration's deal to get ZTE back to work. Last week the Commerce Department said it had reached an agreement with ZTE. Under the terms of the arrangement, the Chinese phone maker must pay a $1 billion fine, put $400 million into escrow, wholly change its top leadership within 30 days, an accept a U.S.-led compliance officer. The ban will remain in place until ZTE makes the payments, which it has yet to do. Republican Senator Tom Cotton and Democratic Senator Chris Van Hollen today introduced the measure, which would restore the penalties against ZTE, to the National Defense Authorization Act (NDAA), a bill voted on by the Senate every year. Reuters says the measure could be added to non-controversial portions the NDAA, or areas that don't come under heavy debate in the Senate. If the measure is passed in the Senate, it would have to be reconciled with the House of Congress' version of the NDAA and later signed by the President. ZTE was sanctioned for violating the terms of a 2017 settlement agreement over unlawful sales to Iran and North Korea. Beginning in April, the company was cut off from U.S.-made hardware and software for a period of seven years. The company has largely been idle since.
The Commerce Department has reached a deal with ZTE that will get the company out from under a ban on U.S. parts and software. Under there terms of the agreement, ZTE will pay a fine of $1 billion and put an additional $400 million into escrow that it will forfeit if it violates the terms. In addition to the fine, ZTE must change its entire board of directors within 30 days. Further, the U.S. will require a compliance team to monitor the company. "I'm very, very happy with this arrangement," said Commerce Department Secretary Wilbur Ross on CNBC. "It is the strictest and largest fine that has ever been brought by the Commerce Department. We are literally embedding a compliance department of our choosing into the company." It's not clear how quickly ZTE will be allowed to get back to work. Analysts believe the company has lost billions of dollars during the shutdown, amidst soured relationships with partners and customers. ZTE was punished for violating the terms of an earlier settlement that was put in place after it was caught selling parts to Iran and North Korea.
ZTE has agreed to preliminary terms with the Commerce Department that will eventually allow it to get back to business. The company has effectively shut down in the wake of a Commerce Department ban that prevents the company from using U.S. components and software in its phones. The company has taken job responsibilities away from select executives, filed official letters of reprimand, and is attempting to take back bonuses paid to some execs, says the Wall Street Journal. ZTE will also have to pay a sizable fine. The deal is not final and is still under review from the Trump administration, which has used the company's plight to invigorate trade talks with China. Even if a deal is struck and ZTE resumes operations, it is facing steep challenges due to disgruntled customers. For example an Italian carrier, called Wind Tre SpA, has demanded $117 million from ZTE due to stalled construction on base stations. Moreover, T-Mobile has walked away from a distribution deal worth more than a billon dollars, according to the Journal, thanks to ZTE's inability to supply it with phones and other gear. ZTE was the fourth-largest supplier of phones in the U.S. before the ban went into effect. It's not clear if or when a deal might be fully signed and put into effect.
ZTE may have to agree to a heavy fine and sweeping management changes if it wants to resume operations. The Trump administration is prepared to levy up to $1.7 billion in fines against the company to punish it for violating the terms of an earlier settlement. Further, the Commerce Department wants "unfettered site visits" to ensure that ZTE is using U.S. parts as intended. The company may also be required to bring in a wholly new management team. In April, the Commerce Department banned ZTE from using U.S. parts and software for its devices, effectively putting ZTE out of business. The company ceased major operations in May. Sources cited by Reuters indicate that final terms of the settlement are not set and may change. Despite the Trump administration's work to get ZTE back in business, some senators believe ZTE represents a security threat and deserved the punishment. They are working to keep the ban in place.
The Trump administration has handed ZTE an olive branch, according to sources cited by the New York Times and Reuters. The Commerce Department has brokered a deal that will allow ZTE to resume operations as long as it agrees to pay a substantial fine, submit to American compliance officers, and wholly change is management team. If ZTE abides by these terms, the Commerce Department will lift its ban preventing U.S. companies from supplying ZTE with hardware and software. The Commerce Department socked ZTE with the ban last month after it discovered the company misrepresented actions concerning a previous settlement agreement. The Trump administration has been back-and-forth concerning ZTE’s fate over the last week and did not confirm the details of its recent trade meetings with China. Some U.S. lawmakers are not convinced ZTE should be allowed to resume operations and have been vocal in their opposition to any deal that sees ZTE allowed to buy U.S. technology.
The U.S. and China are near to reaching a deal that would offer ZTE reprieve from the seven-year ban enacted against it by the Commerce Department. Sources cited by the Wall Street Journal and Reuters suggest the negotiations are close to complete, but not finalized. Under the framework of the new deal, ZTE will have to pay a penalty and largely change the makeup of its board of directors and other leadership posts. The company was banned from using components and software from the U.S. because it violated an earlier settlement regarding its illegal sale of goods to Iran and North Korea. As a result, ZTE has largely been put out of business. The company has some 75,000 employees, mostly in Shenzhen, China. The talks come as President Trump's administration tries to hammer out a broader trade deal between the U.S. and China. Some congressmen are not happy with Trump's stance, as the Commerce Department believes its action was a fair penalty for illegal behavior. Republican Senator Marco Rubio blasted Trump's moves. "Making changes to their board and a fine won’t stop them from spying and stealing from us. But this is too important to be over. We will begin working on veto-proof congressional action," he argued via Twitter. On May 18, the House Appropriations Committee voted on an amendment that upholds the Commerce Department's sanctions against ZTE. Specifically, the amendment prevents the U.S. Commerce Department from renegotiating its sanctions against ZTE in order to prevent ZTE from gaining access to hardware and software from its U.S. suppliers. Other aspects of the Trump deal with China would see cuts in import tariffs for cars and car parts, and a change in the amount of U.S. agricultural products allowed into China. None of the parties involved commented on the matter, as any deal to lift the ban against ZTE has not been finalized.
The House Appropriations Committee this week voted on an amendment that upholds the Commerce Department's sanctions against ZTE. Specifically, the amendment prevents the U.S. Commerce Department from renegotiating its sanctions against ZTE in order to prevent ZTE from gaining access to hardware and software from its U.S. suppliers. The Commerce Department slapped ZTE with the ban last month after it discovered that ZTE misrepresented the actions it took in a 2017 settlement. Over the weekend, President Donald Trump surprisingly tweeted in support of ZTE, suggesting the Commerce Department help ZTE "get back into business, fast." ZTE has largely ceased operations and idled some 75,000 employees in the wake of the ban. The amendment voted on by the house will "prevent a foreign company that is beholden to its government — and that ignores embargoes — from infiltrating the devices and networks that are now indispensable to American life," said Rep. Dutch Ruppersberger (D-Md.) in a statement. "This amendment, which passed with the unanimous support of my colleagues on both sides of the aisle, shows that, when the United States enacts sanctions, we stand behind them." The bill was coauthored by Ruppersberger and Rep. Rosa DeLauro (D-Ct.).
Security, not trade, is the issue, say a handful of Senators who today pushed back against President Donald Trump's efforts to help ZTE. The U.S. Department of Commerce banned American companies from supplying ZTE with parts or software for a period of seven years. ZTE precipitated the ban by bungling a settlement agreement over its illegal sale of technology to Iran and North Korea. The company ceased most operations earlier this month. Over the weekend, Trump tweeted in support of ZTE. He suggested that too many jobs were being lost in China and he wanted to help the company get back in business quickly. Speaking Tuesday, Republican and Democratic Senators suggested that Trump's approach is not the right one. "I confess I don't fully understand the administration’s take on this at this point," said Senator Mac Thornberry. "It is not a question to me of economics, it is a question of security." Some in the government worry ZTE and Huawei devices could be used to spy on Americans. Thornberry indicated that he doesn't expect the Commerce Department will remove the ban. Trade emissaries from China and the U.S. are expected to meet again this week.
Samsung is speaking with a number of device makers, including ZTE, about supplying its Exynos mobile application processors. Samsung wants to expand its processor business in a bid to be more competitive with Qualcomm, MediaTek, and others. Samsung uses the Exynos line in its own Galaxy smartphones. The company supplies Exynos chips to only one outside business: China's Meizu. "We are talking to all OEMs," including ZTE, said Inyup Kang, head of Samsung’s logic chip business. For the moment, U.S. companies such as Qualcomm are forbidden from supplying ZTE with components due a Commerce Department ban. ZTE has halted business operations as it wrangles with the U.S. government in an attempt to reverse the ban. The ban highlights the risk of relying on a single company for parts. ZTE could avert some problems by diversifying its suppliers. Samsung's Kang said the company expects to announce new clients for its Exynos chipsets in the first half of 2019.
Wilbur Ross, the U.S. Secretary of Commerce, said his department is open to changing its ban impacting ZTE. The agency has forbid U.S. companies from selling hardware or software to ZTE for a period of seven years after the company was caught lying about an earlier settlement agreement. "ZTE did do some inappropriate things. They’ve admitted to that," said Ross speaking at a National Press Club event. "The question is: Are there alternative remedies to the one that we had originally put forward? And that’s the area we will be exploring very, very promptly." Ross didn't suggest how the Commerce Department might walk back its ban, which has effectively strangled ZTE's smartphone business. At the same time, President Donald Trump found himself defending his wish to help the company get back on its feet. "ZTE, the large Chinese phone company, buys a big percentage of individual parts from U.S. companies," said Trump via Twitter. ZTE's main U.S. supplier is Qualcomm, which sells the company processors and cellular modems. ZTE also licenses the Android operating system from Google. "This is also reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi [Jinping]." noted Trump. ZTE's 75,000 workers have been mostly idle since the ban was announced. Trump tweeted over the weekend that he wanted to help them get back to work. The Commerce Department insists its ban is just punishment for illegal behavior and not related to the on-going trade talks between the U.S. and China.
President Trump took to Twitter this morning to suggest he's looking to recall the Commerce Department's ban against ZTE. "President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast," wrote the President. "Too many jobs in China lost. Commerce Department has been instructed to get it done!" The Commerce Department banned U.S. companies from selling parts and software to China-based ZTE for failing to live up to a 2017 settlement agreement. ZTE was caught selling parts to Iran despite international sanctions. The company paid a massive fine and agreed to penalize some 35 managers as a result. The Commerce Department says ZTE did not penalize its managers and then lied about it. The ban, which is supposed to last through 2025, has effectively put ZTE out of business. Last week, the company ceased most operations as a result. It's unclear what President Trump actually said to the Commerce Department, nor is it clear how long it might take to actually reverse the ban.
ZTE has all but shut down in the wake of a government-issued ban that prevents U.S. companies from selling ZTE hardware or software. "As a result of the Denial Order, the major operating activities of the company have ceased," said ZTE in exchange filings. "As of now, the company maintains sufficient cash and strictly adheres to its commercial obligations subject to compliance with laws and regulations." The company has maintained some staff in order to fight the ban. It is talking to the U.S. "in order to facilitate the modification or reversal of the Denial Order by the U.S. government and forge a positive outcome in the development of matters." The company didn't spell out details of its operations shutdown. ZTE enjoyed success in the U.S. over the last few years where it found a niche selling low-priced, big-screened Android phones via prepaid carriers MetroPCS and Cricket Wireless. The company's U.S. partners have been silent on its fate since the ban was first ordered. Speaking on the sidelines of the Google I/O developer conference, one Google executive said the situation "was bad for Android."
The Taiwanese government has given MediaTek, a Taiwan-based supplier of mobile chips, permission to once again sell its products to ZTE. After the U.S. government halted U.S. suppliers from selling to ZTE for a period of seven years, the government of Taiwan paused such exports in its own country. It required MediaTek and other Taiwan businessss to file an application for permission to sell to ZTE. Taiwan granted MediaTek, which specializes in mobile processors, that permission today. "We fully understand high-tech factories' characteristic of fast-paced shipments of goods, we won't create obstacles for the pace of their exports," said the Taiwan Bureau of Foreign Trade in a statement provided to Reuters. "Taiwan's government has its own control mechanisms, which is independent of the way the U.S. looks at it in a given situation." ZTE recently filed official paperwork with the U.S. Department of Commerce seeking an end to the ban, which threatens its very survival.
ZTE has filed an application with the U.S. Commerce Department's Bureau of Industry and Security in hopes that the government will suspend its ban against the company. Last month, the Commerce Department banned U.S. companies from selling parts or software to ZTE for a period of seven years. The government put the ban place because ZTE was caught misrepresenting the actions it took after settling with the government for an earlier infraction (exporting technology to Iran). ZTE has called the ban unfair and unreasonable, suggesting it could put the company out of business. The ban prevents companies such as Qualcomm from supplying ZTE with processors and also prevents companies such as Google from licensing the Android operating system to ZTE. Last week, a U.S. trade delegation met with Chinese trade officials who asked the U.S. to reassess its actions against ZTE. The U.S. delegates said they would speak with President Donald Trump about the matter.
China hopes he U.S. will have a change of heart and alter the seven-year ban it imposed against ZTE. Senior officials from both countries met in China on Friday, says Reuters, to discuss this and other trade matters. Last month, the U.S. Department of Commerce slapped ZTE hard by banning U.S. companies from selling the Chinese phone maker parts or software for a period of seven years. This includes processors and operating systems such as Android. The ban was imposed because ZTE broke an earlier agreement it made after it was caught exporting gear to Iran. The punishment is severe enough that it threatens to destroy ZTE's phone business entirely. ZTE called the ban unacceptable. Reuters' sources say the Chinese representatives asked the U.S. reps to listen to ZTE's appeal and consider the steps the company has taken to address the matter. China’s Ministry of Commerce confirmed that the U.S. officials took the matter seriously and they promised to discuss the matter with President Trump. U.S. officials insist ZTE's punishment is not related to broader international trade policies, but there's no question the U.S. has ramped up action against Chinese phone firms. Members of the government have pushed hard against Huawei, which saw distribution deals with AT&T and Verizon Wireless evaporate in January. Earlier this week, the Pentagon banned base exchanges from selling Huawei and ZTE phones. Some members of the government are pushing to make it illegal for government employees to own or use a Huawei phone for work purposes. It's unclear what impact China's request concerning ZTE will have in the long run.
The government doesn't want military personnel buying Huawei or ZTE phones. The Pentagon has ordered the retail stores on U.S. bases around the globe to cease selling phones made by the two Chinese companies. "Huawei and ZTE devices may pose an unacceptable risk to the department’s personnel, information and mission," said Army Maj. Dave Eastburn, a Pentagon spokesperson, in a statement provided to the Wall Street Journal. "In light of this information, it was not prudent for the department's exchanges to continue selling them." Maj. Eastburn said the government can't tell troops not to buy Huawei or ZTE phones for personal use, at least not yet. Huawei and ZTE have been squeezed by the Trump administration this year, which insists phones from these companies could be used by the Chinese government to spy on Americans. The Pentagon worries Huawei and ZTE phones could give foreign governments insight into base operations and troop movements. Huawei and ZTE strongly deny such claims. Members of the Republican party have already floated legislation that would make it illegal for government personnel to buy Huawei phones for work purposes. More recently, the Department of Commerce banned U.S. companies from selling parts or software to ZTE for a period of seven years. Huawei said, “We remain committed to openness and transparency in everything we do and want to be clear that no government has ever asked us compromise the security or integrity of any of our networks or devices.”
Taiwan-based MediaTek today said it has halted its business dealings with China-based ZTE. MediaTek, along with other Taiwan companies that supply ZTE, received a memo from the government of Taiwan that orders it to obtain a permit before shipping any goods to ZTE. "What we do — asking suppliers to apply for an export permit — [is] for the companies' own good, to ensure they are doing legal business with the Chinese firms," said David Hsu, deputy director-general and spokesman for Taiwan’s Bureau of Foreign Trade. MediaTek's CEO today said the company would comply with the order during a call with analysts, suspending shipments to ZTE until it gathers the proper paperwork from the Taiwanese government. Without access to MediaTek chips, ZTE is truly in dire straights. The company is already forbidden to buy chips from U.S. suppliers, such as Qualcomm and Intel, thanks to a ban from the Department of Commerce. The company cannot build mobile phones without processors. ZTE did not immediately comment on the development. The news was first reported by the Nikkei.
ZTE today said it is preparing to take "certain actions" within the scope of U.S. law to fight the Commerce Department's ban against the company. Earlier this month, the Commerce Department banned U.S. companies from selling ZTE hardware or software, such as mobile processors and the Android operating system, for a period of seven years. The move puts ZTE's survival as a phone company at critical risk. Without access to Android, in particular, ZTE will not be able to sell phones in the U.S., where it has found a comfortable niche with prepaid carriers including Cricket Wireless and MetroPCS. The ban was put into effect because ZTE broke a 2017 settlement agreement concerning its sale of forbidden items to Iran. ZTE did not spell out exactly what actions it will take. Late last week a member of the Commerce Department said it will allow ZTE to argue its case via unofficial channels.
ZTE will have an opportunity to ask the U.S. Commerce Department to change its mind regarding the government's decision to ban U.S. corporations from selling hardware or software to ZTE for a period of seven years. An official at the Commerce Department said the agency has given ZTE permission to present more information regarding the actions it took in the wake of its 2017 settlement. ZTE agreed to pay a hefty fine and reprimand 35 executives. The Commerce Department says ZTE did not reprimand those execs and then misrepresented the facts. The agency said this created a breach of trust and it announced the ban earlier this week. According to the Wall Street Journal, "ZTE doesn’t have administrative appeal rights under agency regulations, but the agency had agreed to receive the evidence through informal procedures in the near future." It's unclear what these informal procedures are, nor what impact they might have on the Commercel Department's decision. The ban will prevent ZTE from using mobile processors from Qualcomm and perhaps the Android operating system from Google. ZTE itself said the ban will severely impact the company's chance of survival. Google hasn't commented on the matter directly.
ZTE today said the ban issued by the Commerce Department is unfair and overly severe in what mark its first public comments since the ban was announced. "The Denial Order will not only severely impact the survival and development of ZTE, but will also cause damages to all partners of ZTE including a large number of U.S. companies," said ZTE in a statement. The Bureau of Industry and Security banned U.S. companies from selling ZTE any hardware or software because the company didn't comply with a settlement agreement over an earlier transgression. In 2016, ZTE was caught shipping products to Iran, despite sanctions against the country. ZTE later settled with the government for $455 million and agreed to fire some executives and curb the bonuses of other executives. However, the company did not take the proper actions against its executives and later lied about it to the government. ZTE insists it has taken action against the responsible employees now and has formed committees to ensure it complies with the earlier settlement. "ZTE will not give up its efforts to resolve the issue through communication, and we are also determined, if necessary, to take judicial measures to protect the legal rights and interests of our company, our employees and our shareholders, and to fulfill obligations and take responsibilities to our global customers, end-users, partners and suppliers," said ZTE. Qualcomm, which makes the Snapdragon processors inside ZTE phones, is one of many component suppliers that will be impacted by the ban. More importantly, ZTE may lose the ability to license the Android operating system from Google. Without access to Android, ZTE's entire phone business could be in jeopardy. Google has yet to comment on the matter.
ZTE and Google have met to discuss what to do concerning the Commerce Department's action this week that bans U.S. companies from selling components and software to ZTE. ZTE is being punished for violating the terms of a settlement it signed with the government last year. That settlement covered transgressions in shipping contraband to Iran, which is under sanctions. The U.S. says ZTE misled the Commerce Department over the actions it took in the wake of that settlement and that ZTE is no longer to be trusted. ZTE uses U.S.-based Qualcomm processors in many of its phones. It would not be ablate buy those processors under the ban. More importantly, ZTE uses Google's Android platform. ZTE has a license from Google to use Android. Under the terms of the ban, it may not be able to use Android moving forward, which would throw is entire phone business into turmoil. The two companies have not been able to discern what the exact impact of the ban will be. Neither has commented on the matter directly.
The FCC today moved forward with a plan that would make it harder and/or more expensive for U.S. companies to buy equipment from corporations that might pose a security risk. Though the FCC didn't call out China-based Huawei or ZTE by name, the proposal is clearly meant to keep the two companies sidelined in the U.S market. Specifically, the FCC wants to "prohibit use of [Universal Service Fund monies] on the purchase of equipment or services from any company that poses a national security threat to the integrity of U.S. communications networks or the communications supply chain." The Notice of Proposed Rulemaking adopted by the FCC today isn't final, and the agency is seeking input on how to implement the proposed prohibition. For example, what types of equipment/services should be banned, how should the FCC identify the equipment, what are the costs/benefits, and finally could the rule best be enforced. Huawei and ZTE are taking fire from lawmakers for their supposed ties to the Chinese government. Today's action follows recent blows to Huawei and ZTE. Earlier this year, Huawei lost distribution deals with AT&T and Verizon Wireless, while earlier this week ZTE was banned from buying American components and technology for its phones. "Hidden 'backdoors' to our networks in routers, switches, and other network equipment can allow hostile foreign powers to inject viruses and other malware, steal Americans' private data, spy on U.S. businesses, and more," said FCC Chairman Ajit Pai. Republican lawmakers have also introduced legislation that would bar U.S. government employee from buying Huawei and ZTE phones. Neither Huawei nor ZTE commented on the FCC's actions.
ZTE is not allowed to export sensitive technology from the U.S. due to new action from the U.S. Department of Commerce. Moreover, U.S. tech suppliers (such as Qualcomm) cannot sell components to ZTE for a period of seven years. ZTE violated the terms of an agreement it made with the government over previous transgressions and the Commerce Department is coming down on the company hard. Officials at the agency say ZTE made false statements to the Bureau of Industry and Security in 2016 and 2017 concerning executive pay and disciplinary action related to the company's earlier transgressions. In 2016, ZTE was temporarily blocked for exporting forbidden technology to Iran. In 2017, ZTE agreed to pay a huge fine to settle the matter, as well as fire four executives and discipline 35 other managers. In the wake of those events the company did not take the proper disciplinary action, according to the Commerce Department. "ZTE misled the Department of Commerce. Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behavior cannot be ignored," said Commerce Secretary Wilbur Ross. While ZTE did in fact fire four managers, the company recently admitted it did not take any action at all against the other 35 managers. "We can't trust what they are telling us is truthful," said an official to Reuters. "And in international commerce, truth is pretty important." A lawyer representing companies that sell products to ZTE warned of dire consequences. "This will be devastating to the company, given their reliance on U.S. products and software," said Douglas Jacobson. "It's certainly going to make it very difficult for them to produce and will have a potentially significant short and long-term negative impact on the company." ZTE did not comment on the matter directly.
Security Research Labs says Android phone makers often miss security patches but still tell owners the phones are up-to-date. Researchers Karsten Nohl and Jakob Lell examined the code of some 1,200 phones from more than a dozen phone makers for every security patch released during 2017. They discovered phones from nearly all makers missed at least some patches. Phones from Google, Sony, and Samsung ranked fairly well, missing an average of just one patch. Phones from Xiaomi, Nokia, and OnePlus missed between one and three patches per update, while devices from HTC, Motorola, LG, and Huawei missed three to four, and phones from TCL (Alcatel) and ZTE often missed more than four patches per update. High-end devices with processors from Samsung or Qualcomm were more likely to updated properly, while low-cost devices with processors from MediaTek were less likely to be updated properly. Nohl and Lell say what's worse than the missed patches are the phone makers' claims to the contrary. "We find that there's a gap between patching claims and the actual patches installed on a device. It's small for some devices and pretty significant for others," said Nohl to Wired. "We found several vendors that didn’t install a single patch but changed the patch date forward by several months. That’s deliberate deception." The researchers claim this lulls consumers into a false sense of security, though they admit that hacking into Android phones through any of the missed patches is a difficult task at best. In response to the data, Google argued that not all the devices researched were Android certified, and that modern Android phones have other security measures in place to protect them. "Security updates are one of many layers used to protect Android devices and users," said Scott Roberts, Android product security lead at Google. "Built-in platform protections, such as application sandboxing, and security services, such as Google Play Protect, are just as important." Still, Google said it would work with Security Research Labs to investigate Nohl and Lell's findings.
ZTE made the Tempo Go available for purchase from its online store. The Tempo Go is a version of the Tempo X that runs the Android Go Oreo platform. Android Go is Google's slimmed-down version of Android for ultra low-cost devices with RAM of 1 GB of less. The Tempo Go has a 5-inch display with 854 by 480 pixels and it is powered by a Snapdragon 210 processor with 1 GB of RAM and 8 GB of storage. Other features include a 5-megapixel rear camera and 2-megapixel front camera, microUSB, 3.5mm headset jack, WiFi, Bluetooth, GPS, and a 2,200mAh battery. The Tempo Go is sold unlocked with support for the LTE 4G networks of AT&T and T-Mobile. The phone costs $80.
FCC Chair Would Bar Use of Universal Service Fund to Buy Equipment from Companies that Pose Security Risks
FCC Chairman Ajit Pai wants to prevent the government and companies from using the Universal Service Fund to buy equipment from companies that represent a security threat to the U.S. "Threats to national security posed by certain communications equipment providers are a matter of bipartisan concern. Hidden 'back doors' to our networks in routers, switches — and virtually any other type of telecommunications equipment — can provide an avenue for hostile governments to inject viruses, launch denial-of-service attacks, steal data, and more," said Pai. Pai didn't call out Huawei and ZTE specifically, but the measure is clearly aimed at preventing either Chinese company from making inroads in the U.S. market. Members of the government have been campaigning against the two companies for the last few months. Pressure from a collection of Congressmen nixed distribution deals between Huawei and carriers AT&T and Verizon Wireless. More recently, retailer Best Buy said it will stop celling Huawei phones. Pai has singled out Huawei as a threat in previous statements. "I'm proposing to prohibit the FCC's $8.5 billion Universal Service Fund from being used to purchase equipment or services from any company that poses a national security threat to the integrity of communications networks or their supply chains. The money in the Universal Service Fund comes from fees paid by the American people, and I believe that the FCC has the responsibility to ensure that this money is not spent on equipment or services that pose a threat to national security." The FCC will vote on the Notice of Proposed Rulemaking at its April 17 meeting.
FCC Chairman Ajit Pai today said will take action to ensure the U.S. telecommunications supply chain is protected from potential threats. Pai made the comments in a response to members of Congress who expressed concern about AT&T and Verizon's plans to sell Huawei handsets in the U.S. On December 20, 2017, Senators Tom Cotton, Angus King, John Coryn, Susan Collins, Roy Blunt, Jim Risch, Richard Burr, Marco Rubio, and James Lankford, and Representatives Frank LoBiondo, Brad Wenstrup, Elise Stefanik, Ileana Ros-Lehtinen, Michael Conaway, Michael Turner, Chris Stewart, Rick Crawford, and Peter King all signed a letter imploring Pai to examine the relationship between Huawei, AT&T, and Verizon. The main matter of concern in the letter from Congressional members to the FCC was that government employees might eventually buy and use Huawei devices from U.S. carriers. Some members of the U.S. government have long claimed that Huawei equipment could be used by the Chinese government to spy on Americans. Pressure on AT&T and Verizon put that matter to rest. Shortly after these members of Congress sent the letter to the FCC, AT&T and Verizon Wireless dropped plans to sell Huawei handsets. Earlier this week, Huawei's retail partner Best Buy said it will cease selling Huawei devices in the U.S. Telecom companies in the U.S. are not allowed to buy networking equipment form Huawei. Even so, Pai alluded to taking more action. In his response he said, "I intend to take proactive steps to help ensure the integrity of the communications supply chain in the United States in the near future." Pai did not specify what those steps might be, though Huawei and ZTE continue to be targets of government scrutiny. The FCC did not immediately return a request for comment on the nature of Pai's intended actions.
Xiaomi, the smartphone maker based in China, said it is eying a launch in the U.S. market within 12 months. "We’ve always been considering entering the US. market," said Xiaomi Chairman Lei Jun to the Wall Street Journal. "We plan to start entering the market by end 2018, or by early 2019." The company already has a handful of products on offer in the U.S., such as a 360-degree camera, Mi TV Android set-top box, and headphones. Xiaomi's Jun did not say if the company will seek to strike distribution deals with U.S. carriers or sell directly to consumers via channels such as Amazon and Best Buy. The former would give it the best chance of success, but other Chinese companies haven't fared so well winning carrier deals. Earlier this year, Huawei failed to close such deals with AT&T and Verizon Wireless thanks to pressure from the U.S. government. Worse, the heads of the CIA, FBI, and NSA recently suggested that American consumers should avoid Chinese phones — particularly those made by Huawei and ZTE — altogether. Xiaomi is China's fourth-largest phone maker, and has been highly successful in India. It was one of the first to make an all-screen device, the Mi Mix, back in 2016.
ZTE has built a respectable presence in the U.S. market and doesn't want that to change. The company plans to make "more effort to build the trust among the people in Washington," according to mobile device CEO Lixin Cheng. "We understand the concerns, and respect the concerns of different agencies of the United States government," said Cheng in an interview with CNN. "We promise we are going to work very openly, as we did before, [and] transparently to address their needs and their concerns." ZTE and Huawei were recently called out by the heads of the CIA, FBI, and NSA, who consider the Chinese companies a security risk. ZTE has spent the last few years building strong relationships with U.S. carriers. It now accounts for about 11% of the market thanks to low-cost phones such as the ZMax and XMax. Cheng indicated ZTE will do what it must to ensure it can continue to sell phones to Americans. Earlier this week, the company unveiled new devices, the Blade V9, Blade V9 Vita, and Tempo Go.
The latest in ZTE's Blade series phones are the V9 and V9 Vita. These devices bring ZTE's design language in line with current trends by adopting 18:9 displays. They also put the competition on notice with dual cameras designed to take better low-light photographs. Here is Phone Scoop's first look at the latest from ZTE.
ZTE today announced the Tempo Go, a version of the Tempo X that adopts the Android Go platform. Android Go is Google's slimmed-down version of Android for ultra low-cost devices with RAM of 1 GB of less. Earlier this week, Google promised that more Android Go phones would arrive shortly, and the Tempo Go is leading that wave. The Tempo Go has a 5-inch display with 854 by 480 pixels (FWVGA) and it is powered by a Snapdragon 210 processor with 1 GB of RAM and 8 GB of storage. Other features include a 5-megapixel rear camera and 2-megapixel front camera, microUSB, 3.5mm headset jack, WiFi, Bluetooth, GPS, and a 2,200mAh battery. The Tempo Go will be sold unlocked with support for the LTE 4G networks of AT&T and T-Mobile. Pricing wasn't immediately announced.
ZTE today expanded its lineup of Blade series handsets with the Blade V9 and V9 Vita. These mid-range handsets bring the Blade series up-to-date with competing designs by adopting the 18:9 aspect ratio display. Shared features between these two phones include Android 8 Oreo, dual rear cameras, microUSB, 3.5mm headphone jack, memory card support, GPS, Bluetooth, and WiFi.
- Blade V9: The V9 (pictured) drops the plastic build common to ZTE's older Blade designs for an aluminum frame and glass panels on front and back. The screen measures 5.7 inches and includes full HD+ resolution (2,160 by 1,080). It is powered by a 1.8 GHz octa-core processor and comes in a variety of RAM (2 to 4 GB) and storage (16 to 64 GB) configurations. The V9's dual camera system includes a 16-/5-megapixel combo on the rear and either an 8- or 13-megapixel camera on front. ZTE says it made significant efforts in improving low-light performance of the camera, and the dual-lens system allows people to take bokeh/portrait-style images. The V9's front camera supports Facebook detection for waking and unlocking the phone. Other stand-out features include NFC, fingerprint reader, and 3,100mAh battery. It comes in black or gold.
- Blade V9 Vita: The Vita dials back the size and specs when compared to the premium V9. It drops the metal and glass for a polycarbonate shell that forms the entire rear of the device. The screen is reduced to 5.45 inches at HD+ (1,440 by 720) resolution. It is powered by a Snapdragon 435 processor with 2 GB of RAM and 16 GB of storage. The Vita also has a dual rear camera system with a 13-/2-megapixel configuration and a 8-megapixel shooter on front. The phone has a 3,200mAh battery and it comes in black, pink, blue, and dark blue.
Google today made ARCore 1.0 available to developers and the public, bringing augmented reality to some 100 million smartphones around the world. Handsets compatible with ARCore include Google’s Pixel, Pixel XL, Pixel 2, and Pixel 2 XL; Samsung’s Galaxy S8, S8+, Note8, S7, and S7 edge; LGE’s V30 and V30+; Asus’s Zenfone AR; and OnePlus’s OnePlus 5. More devices from Samsung, Huawei, LG, Motorola, Asus, Xiaomi, HMD/Nokia, ZTE, Sony Mobile, and Vivo will be compatible with ARCore later this year. The 1.0 release gives developers an updated set of tools to create virtual content. For example, it features improved environmental understanding that lets people put virtual objects on surfaces like posters, furniture, toy boxes, books, cans, and more. The refreshed Android Studio Beta supports ARCore in the Emulator, so developers can get to work right away. Some of the first brands to offer ARCore content include Porsche, FC Barcelona, and Sotheby's. Google says it is expanding the availability of the Google Lens Preview, which lets you take a picture and gather information about what's in the image. Google says Lens will hit all Google Photos English-language users over the coming weeks. Further, Google is going to add Google Lens to its Google Assistant on select Android flagship devices. Lens lets people create contacts from business cards, recognize plants and animals, and add events to their calendar by taking photos.