US LTE Ban Lifts

The US Department of Commerce on Friday lifted a ban on US companies selling goods to ZTE  allowing China's second-largest telecommunications equipment maker to resume business. The Commerce Department removed the ban shortly after ZTE deposited $400 million in a US bank account as part of a settlement reached last month. The settlement also included a $1 billion penalty that ZTE paid to the US Treasury.

The administration has clashed with lawmakers from its own party over issues related to China and this was no different. A photograph circulating among employees around midnight showed ZTE new chief executive and 10 other managers each giving a thumbs up to the news.

The reprieve follows threats by the Trump administration this week to impose 10% tariffs on $200 billion of Chinese goods in a trade war. ZTE relies on US components for its smart phones and networking gear ceased major operations after the ban was ordered in April. ZTE paid $892 million in penalties to the United States in connection with the 2017 settlement and guilty plea. The latest $1.4 billion deal comes on top of that.

ZTE Hong Kong shares surged about 24 percent after Reuters broke news the United States had signed an escrow agreement that paved the way for ZTE to deposit the $400 million. Shares of US suppliers Acacia Communications and Lumentum Holdings rose more than 3% on the news before ending less than 1% higher. The US Senate paved the way for a showdown with Trump over the issue last month when it passed an annual defence policy bill with an amendment attempting to reverse the deal.