April 4, 2019 / 5:50 AM / 21 days ago

Elite U.S. school MIT cuts ties with Chinese tech firms Huawei, ZTE

(Reuters) - The Massachusetts Institute of Technology has severed ties with Huawei Technologies and ZTE Corp as U.S. authorities investigate the Chinese firms for alleged sanctions violations, the school said on Wednesday.

The Logo of Huawei is seen at its showroom in Shenzhen, Guangdong province, China March 29, 2019. REUTERS/Tyrone Siu

MIT is the latest top educational institution to unplug telecom equipment made by Huawei and other Chinese companies to avoid losing federal funding.

"MIT is not accepting new engagements or renewing existing ones with Huawei and ZTE or their respective subsidiaries due to federal investigations regarding violations of sanction restrictions," Maria Zuber, its vice president for research, said bit.ly/2K528XI in a letter on its website.

Collaborations with China, Russia and Saudi Arabia would face additional administrative review procedures, Zuber added.

“The institute will revisit collaborations with these entities as circumstances dictate,” she said.

Britain’s Oxford University stopped accepting funding from Huawei this year.

“We’re disappointed by MIT’s decision, but we understand the pressure they’re under at the moment,” Huawei said on Thursday. The company denies the allegations of the U.S. government.

“We trust the U.S. judicial system will ultimately reach the right conclusion,” Huawei said.

ZTE did not respond to a Reuters request for comment.

Representatives for Zuber and Richard Lester, an associate provost at MIT who also signed the letter, referred questions about details such as how much research was likely to be affected to MIT spokespeople, who did not immediately respond.

In a letter to MIT faculty at the start of the current school year, Lester wrote that in cases where U.S. and Chinese interests are in direct conflict, MIT would prioritize its home country.

Meng Wanzhou, Huawei’s chief financial officer and daughter of its founder Ren Zhengfei, was arrested in Canada in December at the request of the United States on charges of bank and wire fraud in violation of U.S. sanctions against Iran.

She denies wrongdoing.

U.S. sanctions forced ZTE to stop most business between April and July last year after Commerce Department officials said it broke a pact and was caught illegally shipping U.S.-origin goods to Iran and North Korea. The sanctions were lifted after ZTE paid $1.4 billion in penalties.

FILE PHOTO: People walk past a ZTE logo outside its booth at the Mobile World Congress in Barcelona, Spain, Feb. 25, 2019. REUTERS/Sergio Perez/File Photo

In Beijing, the Foreign Ministry referred questions to the two companies, but said Chinese firms were required to abide by local laws.

“At the same time, we ask that governments in countries where they are based provide a just, fair, and nondiscriminatory environment,” its spokesman, Geng Shuang, told a news briefing on Thursday.

Chinese telecoms equipment makers have also been facing mounting scrutiny, led by the United States, amid worries Beijing could use their equipment for spying. The companies, however, have said the concerns are unfounded.

Reporting by Kanishka Singh in Bengaluru; Additional reporting by Michael Martina in Beijing and Ross Kerber in Boston; Editing by Clarence Fernandez, Sherry Jacob-Phillips and Sonya Hepinstall

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