Chinese telecommunication giant Zhongxing Telecommunication Equipment Corporation (ZTE), has been barred from buying components and parts from American companies as the trade conflict between China and the US intensifies.
According to media reports, the seven-year ban was announced by the US Department of Commerce (DoC) on April 16. The DoC claimed to have imposed the penalty due to ZTE’s violation of US sanctions on Iran and the company’s attempt to conceal their activities.
ZTE suspended trading in the wake of the ban, with other relevant stocks plunging in price.
Given that a majority of ZTE’s products need high-end chips imported from US suppliers, the ban is widely seen as a heavy blow to the company, which could significantly dent its efforts in 5G innovation.
China’s Ministry of Commerce responded on April 17 that it would watch the ban closely and take any measures necessary to protect the legal rights and interests of Chinese firms.
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