Chinese tech stocks falter amid ZTE decision and smartphone sales concerns

Marsha Scott
April 26, 2018

The U.S. Justice Department has joined two other agencies probing Huawei Technologies for possible violations of sanctions banning sales to Iran, according to two people familiar with the matter. The Commerce Department in 2016 issued an administrative subpoena aimed at Huawei, China's largest maker of telecommunications equipment, seeking information about whether it was sending USA technology to rogue nations including Syria, Iran and North Korea.

In April 2017, the New York Times reported the Office of Foreign Assets Control and the Department of Commerce had issued subpoenas to Huawei during the previous year.

Analysts said a worst-case scenario could entail Huawei suffering the same fate as smaller Chinese rival ZTE which has lost access to US -made components as well as Google Android software in a similar probe. Washington accused ZTE of violating an agreement on punishing employees after the company illegally shipped US goods to Iran.

The action was sparked by ZTE's violation of an agreement that was reached after it was caught illegally shipping USA goods to Iran.

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Huawei who are currently looking for a consumer products spin doctor in Australia, is now facing a criminal investigation after being dumped by retailers and carriers over security concerns.

A group of Republican lawmakers pushed the Trump administration last April to investigate and identify F7, citing news reports that have highlighted the similarities between the company described in the documents and Huawei. Ciena and Infinera, of course, compete with both Huawei and ZTE in global markets (except China). The company is also the world's No. 3 maker of smartphones. The company already caught the attention of the USA government back in 2012 for its rumored ties with the Chinese government.

China's ZTE is seeking a resolution to a USA ban on selling it parts and software that it has said threatens its survival. Still, another setback in the United States market could cause Huawei to throw in the towel and concentrate on other regions.

Other reports by MaliBehiribAe

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