ZTE apologizes for 'disastrous' US scandal

ZTE has apologized to its staff and customers after it reached an agreement to pay $1 billion to the US Government so it can resume trading with American firms.

The company had been banned from obtaining products and services from US suppliers after it breached an agreement reached for illegally shipping products to North Korea and Iran. This led it to suspend operations and admit that its survival was at risk.

However, the deal, which will see ZTE pay a $1 billion fine, change its board and management, and put $400 million in escrow, means it can get back to work on its telecommunications network equipment and smartphones.

ZTE fine latest

While this will doubtless be a relief to its employees, analysts suggest it will be a month before ZTE can resume shipping handsets to the US, while staff fear the reputational and financial damage the incident has caused could affect bonuses and job prospects. There are also concerns that the overhaul of the board could lead to instability.

ZTE Chairman Yin Yimin told staff in a memo, seen by Reuters, that the whole scandal was the fault of ZTE’s leaders and a few employees.

“This issue reflects problems that exist with our firm’s compliance culture and at management level,” he reportedly said. “The activation of the denial order has caused huge losses for the company. The firm has paid a disastrous price.”

Meanwhile, Washington has made it clear that this is ZTE’s last chance, with one White House trade advisor warning that one more infraction would result in it being shut down in the US.

“It’s going to be three strikes you’re out on ZTE. If they do one more additional thing, they will be shut down,” Peter Navarro told Fox.

Steve McCaskill is TechRadar Pro's resident mobile industry expert, covering all aspects of the UK and global news, from operators to service providers and everything in between. He is a former editor of Silicon UK and journalist with over a decade's experience in the technology industry, writing about technology, in particular, telecoms, mobile and sports tech, sports, video games and media.