June 12, 2018

Acacia Communications awaiting OK to resume business with sanctioned Chinese firm ZTE

Photo | File
The Maynard headquarters of Acacia Communications at Mill & Main.

Maynard telecommunications equipment manufacturer Acacia Communications has released its first public statement on Chinese smartphone manufacturer and its largest customer ZTE Corp. since the Trump administration announced a $1.4-billion settlement to allow the company back into U.S. commerce.

In a statement early Tuesday morning, Acacia Communications said it is waiting on the U.S. Department of Commerce to act on the settlement, which includes removing ZTE from a list of entities banned from doing business in the country.

"Acacia has no knowledge about the impact of the ban on ZTE and its broader supply chain or the amount and timing of any demand that ZTE may have for Acacia products," the company said. "If, at any time, Acacia determines that it is permitted to resume its business relationship with ZTE, it will do so only in full compliance with applicable rules and regulations published by the U.S. Department of Commerce in the Federal Register."

The company reaffirmed its second-quarter guidance, which includes revenue decreases between $7 million and $13 million.

The statement comes despite a bipartisan U.S. Senate amendment to the National Defense Authorization Act that seeks to block the deal by reinstating penalties and upholding the ban due to national security concerns about ZTE's close ties to China's communist government, according to the Washington Post.

ZTE was sanctioned in April, hit with a seven-year ban on exporting American products after the U.S. Department of Commerce determined the company failed to live up to a March 2017 agreement. The agreement had ZTE paying a civil and criminal penalty and forfeiture of nearly $1.2 billion after illegally shipping telecommunications equipment to Iran and North Korea, making false statements, and obstructing justice, including through preventing disclosure to and affirmatively misleading the U.S. government.

In addition to the hefty fine, ZTE has agreed to retain a special compliance team selected by the Commerce Department to monitor the company's compliance with U.S. export control laws, Ross announced.

ZTE must replace its entire board of directors and senior leadership for both of its business entities. ZTE and the U.S. agreed to a 10-year suspended denial order the U.S. can activate in the event of any violations during that period.

After the sanctions were announced, Acacia's shares fell nearly 36 percent to as low as $24.72, but the company's stock has since rebounded closing Monday at $34.72.

The Senate's amendment came after the close of trading on Monday.

Read more

Acacia Communications stock down after Senate upholds ZTE ban


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