China's Huawei under United States probe for Iran sanctions violations

ZTE smart phone

ZTE says US ban will 'severely impact' its survival and partnerships

The Department of Justice (DOJ) is investigating Chinese phone-maker Huawei over whether it violated USA sanctions against Iran, The Wall Street Journal reported on Wednesday. The New York Times has reported that the company has been subpoenaed by the Commerce and Treasury Departments over alleged violations of Iran and North Korea sanctions.

Last year, the White House blocked two proposed mergers between USA companies and Chinese companies. The company is said to have been illegally exporting U.S. technology to North Korea and Iran, once caught, the company failed to discipline the staff members associated with the exports. ZTE had previously reached a settlement with the Commerce Department's Bureau of Industry and Security, and pleaded guilty as part of a sanctions-violations agreement with the Justice Department.

The DOJ's actions follow a larger pattern of the US increasingly cracking down on Chinese firms. After all, Huawei has been in the USA government's cross hair perhaps longer than ZTE.

The Journal report gave no details about the investigation.

The DoJ declined to comment, while Huawei was not immediately available for comment.

The sales ban also could disrupt a multibillion-dollar revenue flow to US companies such as Qualcomm Inc. that supply chips, software and other technology. Ciena and Infinera, of course, compete with both Huawei and ZTE in global markets (except China). This post by Doug Dawson outlines some of the moves in Washington against both Huawei and ZTE, two Chinese telecommunications manufacturing giants. Big box electronics retailer Best Buy said last month that it would stop selling Huawei smartphones. The company has said it complies with all applicable laws and regulations where it operates, including US export controls and sanctions laws and regulations, and that it "actively cooperates" with government agencies regarding its compliance. Still, another setback in the USA market could cause Huawei to throw in the towel and concentrate on other regions.

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