Huawei is being criminally investigated by the US Justice Department

ZTE smart phone

-China trade war, the person said.

The action was sparked by ZTE's violation of an agreement that was reached after it was caught illegally shipping USA goods to Iran.

The conference call took place between ZTE and more than a dozen members of the Semiconductor Industry Association, the person said.

The Justice Department probe is being run out of the United States attorney's office in Brooklyn, the sources said. The growing demand for 4K HRD TVsets has also helped ZTE register good shipment numbers for its fixed-network broadband products.

The company's US business has been tightly constrained by worries it could undermine USA competitors and that its cell phones and networking equipment, used widely in other countries, could provide Beijing with avenues for espionage. That will deal a huge blow to ZTE's smartphone business. Canalys, a technology consultancy, estimated that 65 percent of ZTE phones contain Qualcomm chips. ZTE has established the Compliance Management Committee, built a team with global coverage composed of senior export control compliance experts and engaged several counsels and consultants to provide professional guidance in order to establish and optimize ZTE's export control compliance management structure, system and procedure, according to the company's announcement on its official website.

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Huawei would not comment on the Journal report.

Aside from Qualcomm, ZTE's other major business partners include Alphabet Inc's Google, Texas Instruments Inc and GlobalFoundries. ZTE is now facing a seven year supply ban for selling its devices in the Middle Eastern country.

An export ban is also very likely on the table. In 2017 alone, ZTE invested over United States dollars 50 million in its export control compliance program and is planning to invest more resources in 2018. Huawei is now reported to be under investigation by the US Department of Justice for the very same reasons and, considering Huawei's luck, it might get the same verdict as ZTE.

In a recent statement to the Hong Kong stock exchange, ZTE said that it was "making active communications with relevant parties and seeking a solution" to the U.S export denial order.

Huawei "complies with all applicable laws and regulations where it operates, including the applicable export control and sanction laws and regulations of UN, US and EU", according to a statement by the company.

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