UPDATE 1-U.S. extends ZTE reprieve for alleged Iran sanctions violations

(Adds context on impact of restrictions, company comment)
By Joel Schectman
WASHINGTON, June 27 (Reuters) - The U.S. government has
extended through Aug. 30 a reprieve to ZTE Corp 000063.SZ on
tough export restrictions imposed on the Chinese smartphone
maker in March for allegedly breaking sanctions against Iran,
the Commerce Department said on Monday.
The renewed Commerce Department license allows ZTE to
continue exporting equipment containing U.S. technology. The
agency said in March that its first reprieve could be extended
if the company cooperated with the government.
Experts had said U.S. export restrictions were some of the
toughest ever applied and would have caused disruption across
ZTE's sprawling global supply chain.
The restrictions would have banned U.S. companies from
exporting to ZTE any technology, software or equipment such as
chips and processors made in the United States. The decision
would also have prevented software makers from selling typical
office applications like Microsoft (NASDAQ:MSFT) Windows - or even providing
updates.
But soon after imposing the restrictions in March, the
agency offered the company a three-month relief from the
restrictions, which was set to expire June 30. The Commerce
Department announced the extension in a notice posted Monday.
In an emailed statement, ZTE Chairman Zhao Xianming said the
extension shows that the company is improving its compliance and
cooperating with the government's investigation. The reprieve
will allow ZTE to maintain its "relationships with hundreds of
American companies and our continued investment in the U.S," he
said.
The Commerce Department investigated ZTE for alleged
export-control violations following Reuters reports in 2012 that
the company had signed contracts to ship millions of dollars
worth of American-made hardware and software to Iran's largest
telecoms carrier.