The U.S. Commerce Department reportedly slapped Chinese smartphone maker ZTE with export restrictions on Monday in the wake of allegations the company violated U.S. export controls on Iran.
According to a report from Reuters, the restrictions will force any ZTE supplier that wants to ship America-made products to the company in China to apply for an export license. Reuters reported most of those applications will be denied, making it difficult for U.S. products to reach ZTE.
The restrictions are slated to be put into place on Tuesday, according to the report. ZTE will have an opportunity to appeal the decision.
The controls reportedly come in response to alleged export-control violations by ZTE in which the company signed contracts agreeing to ship several million dollars’ worth of hardware and software from a well-known American tech companies – including Microsoft, IBM, Oracle and Dell – to Iranian telecommunications carrier Telecommunication Co of Iran (TCI).
Those alleged violations came to light in a series of Reuters reports in 2012 and were subsequently investigated as violations of the United States’ longstanding ban on the sale of U.S. tech products to Iran, Reuters reported.
The reports of pending restrictions led to the halt of trading in ZTE shares on the Hong Kong stock market on Monday, Fortune reported.
Chinese officials were angered by the reports, Reuters said.
In a statement, ZTE said it has been working with the U.S. government on its investigations since 2012 and “strives to ensure all operational activities adhere to international trade practices and the laws and regulations of host countries.”
The company will continue normal operations, ZTE said.
The impact of the restrictions on the broader telecom industry was not immediately clear, but analysts have predicted that supply problems will be the likely result for ZTE, according to Reuters.
Filed Under: Industry regulations