ZTE: A $1.19 Billion Iran Plea, the 2018 Export Ban and a Trump-Xi Rescue

Got something to say to this podcast? Send a voicemail, and you might hear yourself on the next episode!

ZTE was founded in Shenzhen in 1985 as Zhongxing Semiconductor by investors tied to China's Ministry of Aerospace Industry, with Hou Weigui as founder. In 1993 it became Zhongxing New Telecommunications Equipment under a "state-owned and private operating" model: at holding company ZTE Holdings, state-owned enterprises nominate five of nine directors and a founders' entity nominates the other four. Building hardware for both the CDMA and GSM standards, ZTE won 40 percent of new global CDMA network orders by 2006 and was the third-largest GSM vendor by 2009, while selling Axon, Nubia, Red Magic and Blade phones and sponsoring the Houston Rockets, Golden State Warriors, New York Knicks and Borussia Mönchengladbach.

In March 2017 ZTE pleaded guilty to illegally exporting U.S. technology to Iran and North Korea and was fined a record $1.19 billion on condition it discipline those responsible. The Commerce Department found it fired four senior officials but paid bonuses to 35 employees involved and made false statements, and in April 2018 imposed a seven-year ban on U.S. exports to the company. With at least 25 percent of its phone components from the U.S., including Qualcomm processors and Google software, ZTE suspended major operations in May. After Donald Trump and Xi Jinping intervened, a June 2018 settlement required another $1 billion fine, $400 million in escrow, a U.S.-selected compliance team and new senior management. The FCC named ZTE a national security threat in 2020, the Secure Equipment Act signed by President Biden in 2022 barred new ZTE equipment, and in May 2026 the European Commission recommended EU states exclude its gear.

• U.S. court filings allege ZTE ran a dedicated department for managing bribes to win telecom contracts in West Africa, and a DOJ probe into bribery in South America was ongoing as of December 2025.
• Telenor banned ZTE in 2008 over procurement conduct, and a Philippine government broadband deal was canceled over kickback allegations.
• In 2010 ZTE sold an eavesdropping system to Iran's government-controlled telecom company, and Reuters reported in 2018 that it helped build Venezuela's fatherland ID card.
• A ZTE Score phone sold in the U.S. contained a hard-coded password that allowed remote access.
• India blocked ZTE from its 5G rollout after 2020 border clashes, Sweden banned it on security advice, and ZTE did not withdraw from Russia after the invasion of Ukraine.