ZTE paid over $2.3 billion to U.S. exporters last year

BEIJING -Chinese technology company ZTE Corp. 0000063.SZ  (0763.HK), which this month suspended its core business after the introduction of the ban Department of Commerce US  supplies  to its business, has paid over 2.3 billion USD 211 US exporters in 2017, said  senior ZTE representative on Friday.

The official said that ZTE has paid over $ 100 million to each Qualcomm Inc (QCOM.O), Broadcom Inc. (AVGO.O), Intel Corp (INTC.O) and Texas Instruments (TXN.O).

Being one of the largest manufacturers of telecommunications equipment in the world, ZTE relied on US companies such as Qualcomm and Intel for components.

The degree of influence of the Ministry of Commerce ban on US suppliers was marked by the official ZTE, which were not allowed to speak in public, as Chinese and American officials discuss Washington's visit next week, a senior economic official in China.

In March last year, ZTE paid around US $ 900 million for fines for US and North American technology exports in violation of sanctions.

In April this year, the Department of Commerce discovered that ZTE violated the terms of the last year's settlement and banned American companies from exporting to ZTE for seven years. As a result, ZTE suspended its main operations at the beginning of this month.

The ban on the export of goods to Chinese network equipment and the handset manufacturer was discussed by the US Department of Commerce when last week a delegation led by US Treasury secretary Steven Mnuchin met Chinese officials in Beijing.

China appealed to President Donald Trump to abandon his threat of imposing tariffs on imports from China, considered Chinese investments in line with US security reviews, and revised the ban on ZTE.

According to a person familiar with this problem, the official request of ZTE to the US Department of Commerce for an immediate stay on April 15 is forbidden. This order has caused "irreparable harm" to the company and its partners, as well as to millions of consumers, including those who own phones and large network operators.

Analysts estimate that US companies account for between 25 and 30 percent of the components used in ZTE hardware, including smartphones and equipment for building telecommunications networks.

According to analysts, the ban on U.S prohibited ZTE from using some Qualcomm processors and Android devices using the Google Mobile Services software.

ZTE has paid over US $ 100 million to other suppliers in 2017, including chip manufacturers Xilinx Inc (XLNX.O) and optical components from Acacia Communications (ACIA.O) and the manufacturer of microprocessor memory Sandisk, a ZTE representative said.

Intel, Broadcom and Qualcomm refused to comment.

Last month, Qualcomm announced that it expects a decrease in sales of ZTE, this quarter will reduce its profit by 3 cents per share.

ZTE is not one of the most well-known clients of Qualcomm, including Apple Inc. (AAPL.O), Samsung Electronics Co., Ltd (005930.KS) and Chinese OPPO manufacturers, and vivo smartphones.

None of the other companies can be obtained immediately for the comment.

Prohibition also harms ZTE in the provision of services such as infrastructure repair, customers in other countries and regions in which it operates. ZTE provides services to 100 million users in India, 300 million users in Indonesia and 29 million users in Italy, the official said.

ZTE inability to implement agreement on the department of commerce in 2017 not rebuffed reprimand or lowering the bonus for employees 35 related offenses, as well as false statements, the Department of Commerce previously.

ZTE independently reported the problem of discipline and corrected the mistakes, ZTE representative said, adding that failure was not part of the same offense that led to confession last year.

The official said that the recent ban was a disproportionate gross fine that ignored the steps that ZTE has taken in respect of compliance with US regulations.

Deputy Prime Minister of China Liu is expected to resume trade talks with the Trump administration this week, after discussions in Beijing last week did not agree to a long list of US trade demands.