The US Department of Commerce is set to place export restrictions on Chinese telecoms equipment maker ZTE Corp (中興) for allegedly violating US export controls on Iran, according to documents seen by Reuters.
The restrictions would make it difficult for the company to acquire US products by requiring ZTE’s suppliers to apply for an export license before shipping any US-made equipment or parts to ZTE. According to a US Department of Commerce notice that is scheduled to be published next week in the US Federal Register, the license applications generally would be denied.
The restrictions are to take effect tomorrow and apply to any company worldwide that wants to ship US-made products to ZTE in China. Those companies are not the target of the export curbs on ZTE.
“This is a significant new burden on trade with ZTE,” a senior official at the department said.
The official declined to comment on whether the US government might take further action against ZTE.
A spokesman for ZTE, based in Shenzhen, China, could not be reached for comment. The company can appeal the action.
The Commerce Department investigated ZTE for alleged export-control violations following reports by Reuters in 2012 that the company had signed contracts to ship millions of US dollars worth of hardware and software from some of the US’ best-known tech firms to Iran’s largest telecom carrier, Telecommunication Co of Iran and a unit of the consortium that controls it.
The US product makers — which included Microsoft Corp, IBM Corp, Oracle Corp and Dell Inc — have all said they were not aware of the Iranian contracts. It is not clear if any of these companies still do business with ZTE.
Washington has long banned the sale of US-made tech products to Iran. The department’s investigation focused on whether ZTE had acquired US products through front companies and then shipped them to Iran, a violation of US sanctions.
What effect the new export restrictions would have on ZTE’s current international business is not clear.
One of ZTE’s Web sites also states that several major US tech companies, including Microsoft, Intel Corp, IBM and Honeywell International Inc, are “key strategic partners of ZTE.” The terms of the partnerships are not described.
A Microsoft spokeswoman said the company had a licensing agreement with ZTE, but could not confirm if the Chinese company purchases other products, such as software. The other US companies did not respond to requests for immediate comment.
The undated internal ZTE document also describes a proposal overseen by the company’s legal department that describes ways to export US products subject to US sanctions by using shell companies to avoid getting caught.
“The biggest advantage” of one method is that it would make it “harder for the US government to trace it or investigate the real flow of the controlled commodities,” the document said.
In its planned action against ZTE, the Commerce Department cites the proposal, stating that the company “planned and organized a scheme to establish, control, and use a series of ‘detached’ companies to illicitly re-export controlled items to Iran in violation of US export control laws.” It is not clear if the alleged scheme was carried through.
Another internal ZTE document from August 2011 that discusses “US export control risks” facing the company allegedly was signed by several top ZTE officials, including its president Shi Lirong (史立榮).
The document states that ZTE “has on-going projects in all five major embargoed countries — Iran, Sudan, North Korea, Syria and Cuba. All of these projects depend on US-procured items to some extent, so export control obstacles have arisen.”
The document goes on to cite “other risks” to ZTE, including its operations in the US.
“R&D employees at the US Research Centers often travel between China and the US, carrying R&D data,” it said. “This already severely violates the law.” The document does not specify what law might have been violated.
The company “needs to take preventative measures immediately, otherwise will face the risk of being investigated anytime,” the document said.
The document also says that ZTE's Iran project “can potentially put us at risk of being put on the blacklist by the US. If on the blacklist, our company may face the risk of losing the supply chain of US products.”
ZTE is one of the world's largest telecom equipment makers with operations in 160 countries. It also is a major manufacturer of mobile handsets. Founded in 1985, its shares trade on both the Hong Kong and Shenzhen Stock Exchanges.
Besides ZTE, the export curbs would apply to two of its Chinese affiliates, ZTE Kangxun Telecommunications Ltd (中興康訊電子) and Beijing 8-Star (北京八星) and an Iranian company, ZTE Parsian.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
FUTURE PLANS: Although the electric vehicle market is getting more competitive, Hon Hai would stick to its goal of seizing a 5 percent share globally, Young Liu said Hon Hai Precision Industry Co (鴻海精密), a major iPhone assembler and supplier of artificial intelligence (AI) servers powered by Nvidia Corp’s chips, yesterday said it has introduced a rotating chief executive structure as part of the company’s efforts to cultivate future leaders and to enhance corporate governance. The 50-year-old contract electronics maker reported sizable revenue of NT$6.16 trillion (US$189.67 billion) last year. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), has been under the control of one man almost since its inception. A rotating CEO system is a rarity among Taiwanese businesses. Hon Hai has given leaders of the company’s six