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. The Commerce Department said that ZTE must also put $400 million in escrow - a sum that it would forfeit if it violated today's agreement.
Under the new agreement, ZTE will have to pay a $1 billion fine and replace its entire board of directors and senior leadership.
First published June 7, 5:31 a.m. PT Updates, 5:54 a.m.: Adds background; 8:26 a.m.: Includes comment from Commerce Department release; 11:09 a.m: Adds ZTE declining to comment. An outside compliance team is already working with ZTE as part of the precious trade enforcement deal.
"We still retain the power to shut them down again", Commerce Secretary Wilbur Ross said Thursday in an interview on CNBC. The company already has a USA court-appointed monitor. "If they commit any further violations, we would again be able to deny them access to USA technology".
The U.S. had imposed sanctions on ZTE for illegal sales to Iran and North Korea, but the Chinese company agreed to take corrective action. Last year, ZTE settled the case with the USA government, promising to pay $890 million in fines and punish dozens of ZTE executives who orchestrated the illicit technology sales.
Wyden called the deal "a loser for American security and a loser for American workers". The company allegedly paid bonuses to employees who violated the sanctions, while telling American counterparts that those employees had been disciplined. It has enjoyed the backing of Chinese President Xi Jinping, who has been negotiating with Trump over a broader trade agreement.
Both Republicans and Democrats criticized Trump's willingness to make a deal on ZTE. Trump countered by pointing out that the Obama administration let "ZTE flourish with no security checks". The gear maker pleaded guilty a year ago in federal court in Texas for conspiring to violate USA sanctions to Iran.
Mr Ross emphasised that the agreement was separate from trade negotiations between the U.S. and China. The total deal is $1.4bn.
Washington and Beijing have reached a deal to ease sanctions that brought Chinese smartphone maker ZTE to the brink of collapse, the USA said Thursday - a possible indication of progress in fraught trade talks between the world's two largest economies. It appears that ZTE could be "back in business" after being consigned to the technological wasteland for breaking last year's deal concerning illegal telecom shipments to Iran and North Korea. "When it comes to China, despite his tough talk, this deal with ZTE proves the president just shoots blanks".
"It's hard to believe there's no linkage but Ross clearly left Beijing without anything last weekend", he said.