U.K has banned any dealings with Chinese telecom major ZTE on national security grounds. The United States also has effectively banned the Chinese company from the American soil for seven years.
Britain and the US have taken action against the major Chinese telecom company ZTE, effectively banning it from both countries.
British National Cyber Security Centre (NCSC) ordered (on 16 Apr) the UK telecom sector not to use equipment or services from ZTE, as it would have a “long-term negative effect on the security of the UK.”
Hours later, the US Commerce Department announced it was banning the sale of components to ZTE for seven years. This was said to be enforcing an agreement the company had entered when it pleaded guilty in March 2017 to breaching bans on sales to North Korea and Iran.
Under that deal, ZTE paid some $1.2 billion in fines and said it would take action against those involved. Four company directors were sacked but the Commerce Department said bonus was paid to other employees who were also involved.
Secretary Wilbur Ross said: “Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behaviour cannot be ignored.”
Commerce Department officials said these actions were not related to the recent measures initiated by the White House targeting Chinese companies operating under the “Made in China 2025” programme, by which China is seeking to advance its high-tech development in telecommunications and other areas.
“The timing of this is somewhat unfortunate because it could make it seem like they are connected,” a senior Commerce Department official was quoted as saying.
Under the decision, US companies are banned from conducting any business with ZTE in the US or anywhere else in the world.
Last year ZTE purchased as much as $1.6 billion worth of products from US chip makers, and it is a significant customer of both Qualcomm and Intel. It has sold handset services to major US companies, including AT&T, T-Mobile and Sprint.
A smaller US company, Acacia Communications, that supplies ZTE has been hard hit. Last year it derived 30 percent of its $385.2 million of revenue from sales to ZTE. Its shares fell 35 percent in trading on 16 April.
The Commerce Department action came amid calls for more aggressive moves by US authorities against Chinese communications and telecom firms.
Last month the US fears of Chinese telecommunication advances were highlighted by the Trump administration’s decision to ban a proposed takeover by Broadcom from Qualcomm stable. This step followed a finding by the Committee for Foreign Investment in the US that the takeover would give advantage to Huawei in the development of 5G phone technology.
The British decision to ban ZTE was taken on national security grounds. The NCSC said that if ZTE became a big supplier to the UK it could pose a risk to measures it has taken against Huawei, which is a big supplier to the British telecom sector. Huawei agreed some years ago to set up a centre where its components can be broken down and inspected.
In a letter to British telecom firms, NCSC technical director Ian Levy wrote: “The UK telecommunications network already contains a significant amount of equipment supplied by Huawei. Adding in new equipment and services from another Chinese supplier would render our existing mitigations ineffective.”
The NCSC said it was concerned over new Chinese laws which it claimed gave Beijing “wide-ranging powers of compulsion” that could force companies to infiltrate or sabotage telecommunications infrastructure.
NCSC chief, Ciarin Martin, said “there are millions of machines being targeted globally” and the alert was part of an allied “fightback against state-sponsored aggression in cyber space.”