>> A Chinese telecommunications giant on Monday, paying a hefty price for breaking American rules. The US Commerce Department is banning ZTE from buying components from US companies, like Qualcomm, Microsoft, and Intel, for seven years. ZTE, a top smartphone seller in the US, pleaded guilty last year for conspiring to violate US sanctions by illegally shipping American goods and technology to Iran.
As part of a settlement, the company agreed to pay up to $1.2 billion in penalties, and to take action against employees who were a part of the violations. But on Monday, the Commerce Department said, the Chinese firm had failed to significantly reprimand its staff, and would now face an even harsher punishment.
Experts say the measure could be devastating for ZTE, as American companies provide almost 30% of the parts used in its products, which include phones and routers. Monday's news bearing down on stocks of optical component makers. Massachusetts based Acacia Communications, a key supplier for ZTE, saw its shares plummet 34%, hitting a two year low.
Other US telecom component makers, like Oclaro, Lumentum Holdings, and Finisar also feeling the burn with dramatic drops in their stock. The Commerce Department's action comes at a sensitive time, with trade tensions brewing between the US and China.>> China is gonna end up treating us fairly. For many years they had free reign, they don't have free reign anymore.
>> As President Trump has threatened punitive tariffs against Chinese imports, and Beijing vowing retaliation.