ZTE may not be the biggest name in smartphones in the United States, but the Chinese company has built itself up as a regular player particularly in the budget segment. Today, though, the United States government has banned US companies from selling to the Chinese company.

Last year, ZTE plead guilty in a federal court for conspiring to illegally ship US goods and tech to Iran, violating US sanctions. ZTE paid nearly $900 million in fines and fired multiple employees in accordance with the court.

However, ZTE was also supposed to “discipline” 35 other employees, which the company has since admitted to having not done. As reported by Reuters, this violation of terms in the sanctions case has resulted in a ban on American companies selling to ZTE. A US official states:

[ZTE] provided information back to us basically admitting that they had made these false statements. That was in response to the U.S. asking for the information. We can’t trust what they are telling us is truthful, and in international commerce, truth is pretty important.

A lawyer representing suppliers to ZTE said that this ban is “highly unusual” and that it will be “devastating to the company.” It’s estimated that 25-30% of ZTE’s components come from US companies, both in the company’s networking gear and smartphone products.

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