Wednesday, 26 September, 2018

NCSC: Chinese Telecoms Firm ZTE is National Security Risk

NCSC warns UK telcos against ZTE equipment due to 'national security' concerns NCSC warns UK telcos against ZTE equipment due to 'national security' concerns
Beatrice Douglas | 17 April, 2018, 20:22

The commerce Department also reported that the employees who were involved in the above mentioned illegal act were paid full bonuses by the company ZTE corp. even failed to issue letters of reprimand for those employees and also lied about the practices to US authorities.

US firms are also likely to get caught in the crossfire, with the fallout set to hit Qualcomm Inc, which provides the lion's share of chips inside ZTE smartphones.

The sanction against ZTE comes after the Chinese company pleaded guilty in 2017 for the illegal shipment of USA equipment to Iran and North Korea.

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"The U.K. telecommunications network already contains a significant amount of equipment supplied by Huawei, also a Chinese equipment manufacturer", NCSC said in a statement.

In March, ZTE agreed to pay $1.2bn in fines after it pleaded guilty to criminal charges of violating U.S. sanctions on North Korea and Iran, which the NCSC said was a "relevant factor" in its decision.

But instead of punishing those involved, "ZTE paid full bonuses to employees that had engaged in illegal conduct, and failed to issue letters of reprimand", the Commerce Department said in a statement.


In a letter seen by the Financial Times, NCSC technical director Ian Levy claims that "the use of ZTE equipment or services within existing telecommunications infrastructure would present risk to United Kingdom national security that could not be mitigated effectively or practicably".

According to the BBC, the US House Intelligence Committee had previously warned that both ZTE and another Chinese firm, Huawei, posed security threats.

The Ministry of Commerce of china responded to the issue of ZTE ban, saying that it would take necessary measures to protect the interests of Chinese businesses.

The company's initial guilty plea was met with up to $1.2 billion penalties and fines, along with the dismissal of four senior employees, along with more fallout for lower-level employees. -China tensions over trade between the world's two biggest economies.

The U.S. action could be catastrophic for ZTE since American companies are estimated to provide 25 percent to 30 percent of the components used in ZTE's equipment, which includes smartphones and gear to build telecommunications networks. ZTE was a regular purchaser from Qualcomm Inc., Intel Corp., Acacia Communications and lumentum Holdings Inc. Oclaro Inc, which got 18 percent of its fiscal 2017 revenue from ZTE, lost 14 percent.

The company has set up a crisis management group in response to the ban, said a ZTE source, declining to be identified as the information was confidential.

Shares of Finisar Corp. It has relied on US companies including Qualcomm Inc, Microsoft Corp and Intel Corp for some components.

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