Tech stocks gain as U.S. confirms ZTE deal

Tech stocks gain as U.S. confirms ZTE deal

The telecommunications equipment maker has been on life support since a seven-year USA ban was imposed in April, breaking a 2017 agreement reached after it was caught illegally shipping goods to Iran and North Korea.

On top of the fine, ZTE will place $400m in an escrow account for future violations, while the US Commerce Department will embed a compliance team within the company.

The Trump administration yesterday announced a deal to allow the telecommunications company to resume buying from USA companies, eliminating a key sticking point for the two nations in their talks on trade.

ZTE a year ago settled criminal and civil charges in connection with its violation of US sanctions on Iran and North Korea.

As it stands, one of China's leading telecommunication's companies is banned from using suppliers in the United States for seven years, forcing the group to close down operations at its Shenzhen factory following the US Commerce Department ruling.

USA companies Qualcomm (QCOM) and Intel (INTC) account for 43 percent of the materials used in ZTE's Chinese-made handsets and networking equipment, according to tech research firm IDC. FBI Director Chris Wray said the proliferation of ZTE phones in the US provides "the capacity to maliciously modify or steal information". "This "deal" with #ZTE may keep them from selling to Iran and North Korea".

"The President just caved on a deal with ZTE, a Chinese company that our intelligence professionals say poses a national security threat", Rep. Adam Schiff (D-Calif.) tweeted.

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Chinese telecoms company ZTE will likely continue to exist, thanks to a deal brokered between it and the U.S. government today. The gear maker pleaded guilty past year in federal court in Texas for conspiring to violate US sanctions to Iran.

The Commerce Department action came after President Trump tweeted earlier this month that he planned to help ZTE because "too many jobs in China" would otherwise be lost.

ZTE hasn't yet commented on the deal. "#VeryBadDeal", Republican Senator Marco Rubio of Florida said on Twitter after the administration's announcement.

Trump argues that bilateral trade deficits reflect bad deals for the USA that need to be rewritten.

U.S. President Donald Trump arrives for a welcoming ceremony in Beijing, China, November 9, 2017.

Qualcomm Chief Executive Officer Steven Mollenkopf said on Thursday he hoped the ZTE agreement would pave the way for the NXP approval. Its global smartphone market share is about 11 percent, and its total revenue was about $92 billion in 2017.

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