The Grand Memo Lite and Grand S ZTE smartphones . Picture: REUTERS
ZTE smartphones . Picture: REUTERS

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LONDON/HONG KONG — The US government plans to temporarily lift export curbs it imposed on Chinese telecom equipment and smartphone maker ZTE for alleged Iran sanctions violations, a senior commerce department official said.

The department restrictions, imposed earlier this month, made it difficult for ZTE to acquire US components by requiring its suppliers to apply for an export licence before shipping any US-made equipment or parts to ZTE.

The department had said the licence applications generally would be denied.

Shenzhen-based ZTE had been "in active, constructive discussions" with the department for the past week, according to a senior official at the agency.

"As part of the effort to resolve the matter, and based upon binding commitments that ZTE has made to the US government, (the department) expects this week to be able to provide temporary relief from some licensing requirements," the official said.

"The relief would be temporary in nature and would be maintained only if ZTE is abiding by its commitments to the US government," the official said.

The details of the commitments are expected to be published this week in the US Federal Register.

ZTE said on Monday it aimed to ensure all of its operational activities adhered to international standards of its host countries and it would continue to communicate with relevant parties to resolve the issue as soon as possible.

Big hit

ZTE is among the largest companies that the commerce department has hit with a near-total export ban, according to public records.

It is the fourth-largest smartphone vendor in the US, with a 7% market share, behind Apple, Samsung Electronics and LG Electronics, according to research firm IDC. It sells handset devices to three of the four largest US mobile carriers: AT&T, T-Mobile US and Sprint.

The export restrictions have drawn protests from the Chinese government and rocked ZTE’s business.

Its shares have not traded on the Hong Kong stock exchange for the past two weeks. The company also said last week it was delaying the publication of its annual results while it assessed the impact of Washington’s action.

ZTE also said it would postpone its board meeting.

Its shares last closed at HK$14.16, prior to a trading suspension on March 7.

Goldman Sachs suspended its coverage on ZTE, saying there was not enough information to determine an investment rating, price target and earnings estimates for the company.

Since coming under fire in 2012 for alleged deals with sanctions-hit Iran and possible links to the Chinese government and military, ZTE has ramped up its spending on Washington lobbyists.

It spent $5.1m in the last four years, up from $212,000 in 2011, as it sought to assuage national security concerns, according to publicly available lobbying records maintained by Congress.

The commerce department investigated ZTE for alleged export-control violations following Reuters reports that the company had signed contracts to ship millions of dollars worth of US-made hardware and software to Iran’s largest telecoms carrier.

Reuters