The preliminary deal includes a $1 billion fine against ZTE along with $400 million in escrow to cover any future violations, said sources aware of the development. 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. Hopefully this time ZTE respects the wishes of the USA government to not sell to banned countries and ultimately this may lead to China and the us finally coming to a real agreement on the larger on-going trade discussion. An employer of 75,000 people, ZTE was crippled by a Commerce Department ban on American firms selling it electronic parts.
Acacia Communications shares are up 4.9%.
Chinese telecommunications giant ZTE agreed to pay a $1 billion fine and submitted to the strictest compliance measures ever issued by the Commerce Department on June 7 in order to regain access to US technology crucial to its business. FBI Director Chris Wray said the proliferation of ZTE phones in the US provides "the capacity to maliciously modify or steal information".
It had been speculated that any deal could be scuppered by resistance from both Democrats and Republicans in US Congress, who believe Trump is bowing to pressure and that ZTE could be a possible threat to national security.
The probe found that ZTE had conspired to evade United States embargoes by buying USA components, incorporating them into ZTE equipment and illegally shipping them to Iran. He countered by highlighting that ZTE "buys a big percentage of individual parts from United States companies" and saying the telecom giant's fate reflects the USA relationship with China. The company already has a USA court-appointed monitor.
ZTE had been blocked from accessing US technology for export control violations. For this "pattern of deception, false statements, and repeated violations", the US Commerce Department issued the ban in April.
ZTE did not immediately respond to requests for comment.
Senate Democratic Leader Chuck Schumer tweeted the "deal with ZTE proves the president just shoots blanks". Bill Nelson and Marco Rubio are backing the new amendment, along with Sens. The U.S. government has not signed the deal yet, however, ZTE has agreed to a previously drawn up deal.
Trump met with his trade advisers on Tuesday to discuss China's offer to import an extra $70 billion of American goods over a year in hopes of defusing a potential trade war between the world's two largest economies. ZTE went into a tailspin, saying last month that it had shut down major operations. Qualcomm rose 1.3 percent.