Steven Mollenkopf, the CEO of QUALCOMM, Inc. (NASDAQ:QCOM) has said he hopes that the recently announced agreement between China and the United States regarding the future of ZTE Corp will create a roadmap that will allow China approve the acquisition of NXP Semiconductors NV by Qualcomm. He said that although they are more focused on individual obligations and application, he hoped something meaningful can come out of the agreement so as to speed up the process.
The U.S-China agreement
Following several meetings and lobbying involving officials from the U.S and China, the U.S relaxed its stand and agreed to reduce its punishment on ZTE, a Chinese telecom company. This was announced by Wilbur Ross, the U.S Secretary of Commerce. Following the agreement, ZTE will now pay a fine of $1 billion. It will also fund a new in-house compliance team that will be staffed by experts from the U.S.
The new agreement will relax the seven-year ban that had been imposed on ZTE to buy American parts. The ban was imposed on ZTE by the U.S Commerce Department earlier in April. Following the ban, the Chinese government filed a complaint saying the move force the company, which is one of the drivers of China’s technology sector and a major employer to close down.
In a statement, Ross said the U.S government will set up a compliance department that will be tasked with overseeing the activities of ZTE going forward. He said this is the stickiest and toughest fine ever imposed on a company violating the country’s export controls.
The decision by the Commerce Department came after President Trump through a tweet said that would help ZTE get back on feet because it has created many jobs in China. The decision by Trump to intervene came as a surprise to many and received a lot of criticism from members of both parties.
Carlos Gutierrez, a former commerce secretary under the Bush administration, the change is the stand that the U.S had taken has helped in avoiding strained relationships between the two countries. He said the ban would have forced China to come up with retaliatory measures that may have culminated into a trade war.