ZTE shares surge on Shenzhen, HK bourses on US ruling

Shares of Chinese telecom equipment maker ZTE Corp jumped by the 10-percent daily limit on the Shenzhen Stock Exchange to close at 25.99 yuan ($4.08) on Wednesday after a US judge ruled that the company should be allowed to see an end of its five-year probation following a 2017 guilty plea.

The Shenzhen, Guangdong province-based company said in a statement that it has received an order from a US court declining to ...impose any penalties on ZTE, and confirming that the term of probation ended as scheduled on Tuesday, US time.

"The company is committed to building itself into a world-class compliance enterprise, making compliance the cornerstone of its strategic development and the bottom line of operations, complying with the applicable laws and regulations of the countries in which it operates, and building a comprehensive compliance system," ZTE said.

The company emphasized it has full confidence in the effective operation and continuous improvement of the compliance management system.

ZTE's Hong Kong-listed shares rose 23.14 percent to close at HK$19.16($2.45) on Wednesday.

In 2017, ZTE pleaded guilty to violating sanctions by shipping telecom equipment to Iran and the Democratic People's Republic of Korea, and paid $890 million in fines and penalties to the US government.

However, the US Department of Commerce imposed a seven-year ban on ZTE's purchase of crucial US technologies in April 2018 in punishment for its violations of an earlier settlement related to sanctions infringements. The company was severely constrained by the ban as it purchased between 25 percent and 30 percent of components used in its equipment from US companies.

In June 2018, ZTE signed a deal with the US government, and had to pay at least $1 billion in penalties and reshuffle its management, a move that would lift a ban on it buying US technologies.

Xiang Ligang, director-general of the Information Consumption Alliance, a telecom industry association, said the case has highlighted that Chinese tech companies should strengthen compliance management, step up efforts in technological research and development and make breakthroughs in key technologies through independent innovation.

Xiang said although confronted with the global COVID-19 pandemic and complex external environment, ZTE has shifted back to its normal track and increased capital input into cutting-edge technologies such as chips.

ZTE's revenue stood at 114.5 billion yuan in 2021, up 12.9 percent on a yearly basis, while the company's net profit attributable to shareholders reached 6.8 billion yuan, up 59.9 percent year-on-year.

Its R&D investment was 18.8 billion yuan in 2021, up 27 percent year-on-year, accounting for 16.4 percent of total revenue.

ZTE said it will continue to invest in core technologies such as chipsets, algorithms and network architecture and speed up its business expansion in information technology, digital energy and smart homes.