Chinese telco ZTE regains access to crucial US suppliers

Chinese telecommunications giant ZTE is poised to resume business with its US suppliers.

ZTE relies on US suppliers to make its smartphones and to build telecommunications networks.

Chinese telecommunications giant ZTE was poised to resume business with its US suppliers as the last major hurdle of the deal President Donald Trump made to save the firm was cleared.

The Commerce Department said it had reached an agreement with ZTE regarding the process by which the firm would deposit $US400 million ($540m) into an escrow account as part of a penalty for violations of an earlier settlement. Once ZTE deposits the money, Commerce will allow it to resume buying from the US suppliers on whom it depends.

The saga over the fate of the Chinese firm began in April, when the Commerce Department banned US companies from selling to ZTE as punishment for its failure to honour an earlier US agreement to resolve its sanctions-busting sales to North Korea and Iran. Because ZTE relies on US suppliers to make its smartphones and to build telecommunications networks, the penalty was effectively a death knell.

On May 13, Mr Trump tweeted that he and Chinese President Xi Jinping were “working together” to find a way to help the company get back into business.

The Commerce Department struck a new deal with ZTE on June 7 that would allow the company to resume buying from US suppliers on the condition that it put the $US400m into an escrow account and pay a $US1 billion fine. ZTE also agreed to replace its board of directors and senior leaders.