Published: Thu, April 26, 2018
Worldwide | By Sean Reid

Justice Department investigating Huawei for violating USA sanctions on Iran

Justice Department investigating Huawei for violating USA sanctions on Iran

Washington accused ZTE of violating an agreement on punishing employees after the company illegally shipped USA goods to Iran.

The Journal report gave no details about the investigation.

Such a probe raises the stakes for Huawei, which is facing a series of actions by Washington to diminish the company's already limited business dealings in the U.S. It could also have spill over effects for its much larger business overseas, particularly in Europe and markets such as Australia where the Federal Government is considering a ban on Huewei supplied 5G networking gear. Today's report says that the Justice Department investigation deals with allegations that Huawei violated USA sanctions against Iran. We'd expect that Huawei - with an increasing potential for a USA government export ban - could be ramping up inventories of Optical components.

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The government's order, which went into effect immediately, bans American firms from exporting components directly to ZTE or through a third country until March 13, 2025.

A spokesman for the Justice Department declined to comment. FCC Chairman Ajit Pai cited the risk of "hidden "back doors" to our networks in routers, switches and other equipment" that could "allow hostile foreign powers to inject viruses and other malware". "In 30 years, not a single operator has experienced a security issue with our equipment".

Huawei has faced several setbacks in the US this year. The company is also the world's No. 3 maker of smartphones. Then, consumer electronics retailer Best Buy Co. stopped selling Huawei phones, laptops and smartwatches. If Huawei were to eventually be cut off from buying USA components, which is not our base case assumption, then the market share gain opportunities for NOK, CIEN and INFN would become even greater, in our view. Earlier Wednesday, the company dropped a planned dollar-denominated bond sale and delayed pricing a European offering.

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