ZTE’s woes have been well documented but the end may well be in sight after they signed an escrow agreement with the US Commerce Department overnight.
After signing the escrow agreement all ZTE has to do is deposit US$400 million in escrow to being operations once again. At the moment they are working under a temporary agreement that lasts until August. Bloomberg are reporting a source as saying the escrow payment will be completed within a day.
As part of the agreement to get the ban lifted ZTE have sacked their entire board and appointed a new chairman and paid a massive US$1.3 billion dollar fine. They still also need to appoint a compliance monitor to oversee the running of the company to ensure there is no further indiscretions.
The US Commerce Department has released a statement that said:
Once the monitor is selected and brought on board, the three-pronged compliance regime — the new 10-year suspended denial order, the $400 million escrow, and the monitor — will be in place. The ZTE settlement represents the toughest penalty and strictest compliance regime the Department has ever imposed in such a case. It will deter future bad actors and ensure the Department is able to protect the United States from those that would do us harm.
It has been estimated that the ban has cost ZTE over US$3 billion in losses, not including the fines imposed. At least after the ban is lifted they can begin operations and go back to trying to win business back.
Of course there is still the Bill heading through Congress that seeks to reinstate the block on ZTE operations in the US. While that is not law just yet, negotiations around it will begin the week but it is hopeful that the concerns over ZTE’s relationship with the Chinese government and possible security issues will also be weighed up with efforts to get them back into business.
We hope that ZTE do make it back into and remain in operation in the US. The smartphone market is too small as it is so to lose one would mean less choice for consumers.
