Photographer: Brent Lewin/Bloomberg

China's ZTE Names New Chief as It Grapples With U.S. Blacklist

  • Smartphone maker in talks with U.S. on ending export ban
  • U.S. officials say ZTE skirted sanctions on sales to Iran

ZTE Corp. has replaced its president, as China’s second-largest maker of telecommunications gear tries to get off a U.S. export blacklist and shake off allegations it side-stepped sanctions against Iran.

Shi Lirong, who has held the top executive role for the past six years, will be replaced by Zhao Xianming, who will also become chairman of the board, ZTE said in a statement Tuesday. Shi will remain a director, said Lunitta Lu, spokeswoman for the Shenzhen-based company.

The appointment comes as ZTE grapples with a U.S. export ban that could hurt its smartphone and networking equipment business. The Commerce Department blocked U.S. exports to the Chinese company in March over allegations that ZTE re-sold goods to Iran, only to suspend that ban till June 30 after both sides opened negotiations. The network gear maker, which says it’s cooperating with the regulator, buys components from American companies including Qualcomm Inc. and Micron Technology Inc., according to data compiled by Bloomberg.

The Commerce Department had asked the Chinese company to remove executives involved in the alleged violations, the Wall Street Journal this week cited anonymous sources as saying. ZTE representatives have declined to comment on the newspaper report.

China Lashes Back

ZTE, which also makes smartphones, has encountered issues with the U.S. government in the past, including accusations of aiding espionage. The company has denied the allegations. The latest flare-up provoked a response from China’s government, which urged the U.S. to remove ZTE from its blacklist to avoid damaging economic and trade relations.

Shares in the company, which has delayed the release of its annual results until April 7, have been suspended since March 7.

ZTE has yet to quantify the impact to its business. It faces significant disruption to its supply chain given major relationships with U.S. companies including Internal Business Machines Corp. and Microsoft Corp., Jefferies Hong Kong Ltd. analysts led by Cynthia Meng wrote in March.

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