China's ZTE said on Friday that a U.S. ban on the sale of parts and software to the company was unfair and threatens its survival, and vowed to safeguard its interests through communication and legally.
The Bureau of Industry and Security (BIS) this week activated a Suspended Denial Order, on the ground that ZTE did not timely reduce bonus of and issue letters of reprimand to certain employees involved in past violation of export control and made false statements in correspondence with the U.S. Government. Thiss means that a ban on sales by American companies to ZTE was impopsed, for a period of seven years.
"It is unacceptable that BIS insists on unfairly imposing the most severe penalty on ZTE even before the completion of investigation of facts, ignoring the continuous diligent work of ZTE and the progress we have made on export compliance and disregarding the fact that (1) ZTE self-identified the issues in the correspondence and self-reported by ZTE immediately; (2) the Company has taken measures against the employees who might have been responsible for this incident; (3) corrective measures has been taken immediately; and (4) a prestigious U.S. law firm has been engaged to conduct independent investigation," ZTE said.
"The Denial Order will not only severely impact the survival and development of ZTE, but will also cause damages to all partners of ZTE including a large number of U.S. companies," ZTE added.
ZTE also defended its policy and measures taken related to the company's compliance with export rules. In 2017 alone, ZTE said it invested over USD 50 million in its export control compliance program and that it was planning to invest more resources in 2018.
The Commerce Department has an appeals process for companies to try to get off the list, but it is unclear whether that would be available to ZTE because the case had been previously subject to a settlement in 2016.
"Since April 2016, ZTE Corporation has continuously reflected on lessons from its past experience in Export Control Compliance and has attached great importance to Export Control Compliance. Within ZTE, compliance is regarded as the foundation and bottom-line of the Company's operation," the Chinese company said.
ZTE said it will not give up efforts to solve problems through communication, and it is determined to take judicial measures to protect the legal rights and interests of the company.
The ban is part of a trade war between China and the United States.
In China, there has been a patriotic backlash with an outpouring of support for ZTE on social media. Local newspapers also criticize China for its high reliance on foreign semiconductors.
Meanwhile, the U.S. government is considering using an emergency law to restrict Chinese investments in sensitive U.S. technologies, a senior Treasury official said on Thursday.
But the ban could also affect U.S. companies such as Qualcomm, which is the main supplier of ZTE in chips used in smartphones and networking equipment.