US Commerce Committee recently imposed a ban of all American companies from selling hardware or software to Chinese companies. The ban was seen to affect ZTE, the Chinese tech major with significantly large exposure to the US market. The media reports indicated that US Commerce Committee is taking action against ZTE for violating the Iran sanctions. Now, it seems Huawei might be under the scanner as well.
According to The Wall Street Journal, the US prosecutors in New York have begun investigating whether Huawei, the leading Chinese smartphone maker and one of the largest telecom equipment manufacturer, violated US sanctions against Iran. The report notes that the US authorities have been probing Huawei’s alleged shipping of US origin products to Iran and other countries in violation of US export and sanctions law since at least 2016. The probe being conducted by the Justice Department is aimed at limiting the access of Huawei, ZTE and other Chinese tech companies to the US market.
Huawei, the third largest smartphone maker in the world, said that it complies with “all applicable laws and regulations where it operates, including the applicable export control and sanction laws and regulations of the UN, US and EU.” ZTE, the other Chinese company being probed by US authorities, had said that the investigation could threaten its survival in the US. The US banned American tech companies from selling hardware and software to ZTE for seven years. ZTE was accused of violating an agreement to punish employees involved in illegal shipment of US goods to Iran.
ZTE has already paid $890 million in fines and penalties and could face additional penalty of $300 million for violation of US export sanctions. Reuters further reports that US authorities have issued subpeona to Huawei seeking information related to possible export and violation of sanctions.
The new investigation by US authorities against China’s Huawei and ZTE adds to the ongoing scrutiny around cybersecurity concerns being imposed by these tech companies. The US Senators have raised concerns against the spread of Chinese technologies in the US and have openly called them part of China’s surveillance and counterintelligence mechanism.
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These concerns and legal actions could only amplify further with US accusing Chinese companies for theft of intellectual property owned by American technology companies. These actions come in the midst of a serious of trade sanctions imposed by Trump administration against import of Chinese products.