Lawmakers said on June 11 that the U.S. Senate will vote as soon as this week on bipartisan legislation to block the deal, which would allow the company to start buying equipment from U.S. suppliers again once its pays the fine and changes its management. Its Shenzhen shares fell by their 10 per cent limit to 28.18 yuan after it confirmed details of the agreement publicized by the US government on Monday. That wiped about $2.7 billion off ZTE's market value Wednesday.
A separate monitor was appointed to a three-year term by a US federal court in Texas last year. It was also ordered to radically overhaul its management. Meanwhile, there's no guarantee USA lawmakers won't come back with further sanctions. That version prevents the government from purchasing ZTE and Huawei products - but doesn't reimpose the sanctions-related restrictions lifted under Trump's deal. "We expect significant near-term selling pressure and a volatile stock price".
The fear among USA intelligence agencies is that Chinese telecom equipment makers such as ZTE and Huawei pose a threat to national security, with even leaders of organisations including the NSA and Federal Bureau of Investigation concerned that ZTE and Huawei could be using their devices and equipment to spy on Americans. But thanks a new bipartisan amendment to the upcoming "must-pass" National Defence Authorization Act, it seems ZTE's one remaining lifeline would disappear by retroactively reinstating the original seven-year ban. The provision was included on a list of amendments that is backed by both Republicans and Democrats. Analysts at Jefferies gave a price target of HK$14.41 in a research note, down from more than HK$25 before the suspension.
Confirming details of the US deal, ZTE said late on Tuesday it would replace its board of directors and that of its import-export subsidiary ZTE Kangxun within 30 days of the June 8 order being signed by the United States. "We'll see if it does" get through Congress, Ross said in an interview in Washington on Tuesday.
In return, the White House rescinded a seven-year ban on purchases of USA components that had forced ZTE to suspend most operations. It depends on US-made components for the production of handsets.
ZTE, in its filing, detailed extensive steps it will take to comply with the settlement.
It will also complete and submit nine audit reports of its compliance with USA export control laws. "And this would essential put the denial order back into effect", Cotton told reporters. ZTE then ceased major operations.