- The Wall Street Journal reported that the Justice Department is investigating whether Huawei violated U.S. export sanctions related to Iran.
- After a ban on the sale of American technologies to ZTE last week for similar export violations, this latest development could cast a serious shadow over the business of the $92.5 billion Chinese company.
- It started years ago, Chinese government tends to use companies like Huawei and ZTE to spy on other countries like the US.
- If Huawei is found guilty of violating American export rules, the U.S. could follow the same playbook it used against ZTE: A large fine ($1.19 billion), active audits, compliance requirements and, in case of non-compliance, a multi-year ban on the purchase of American technology.
- Following the U.S. technology ban on ZTE last week, China’s second-largest telecommunications infrastructure supplier quickly acknowledged that its survival has become uncertain.
- Similarly, since nearly all of Huawei’s telecommunication products (from smartphones to storage, servers, and network equipment) rely, in some shape or another, on American technologies, a ban on such components would be fatal for the world’s largest telecom equipment maker.