ZTE warned expected US trade sanctions imposed on the company are likely to hit its financial results, and a settlement could result in a fine.

The US government hit the China-based vendor with sanctions in March last year after the company allegedly breached the country’s export rules to Iran. The US initially granted temporary relief up to November, and then extended the reprieve by another 90 days to 27 February 2017.

ZTE reiterated in a statement it has been actively cooperating and communicating with relevant US government departments to reach a conclusion to the investigation, and is in negotiations to reach a settlement: “the outcome of which is expected to result in penalties (including but not limited to a fine and other relevant liabilities under US law)”.

The company continued: “The outcome of the settlement issues still remains uncertain, but will likely have a material impact on the financial conditions and operating results of the company.”

If a settlement or a further reprieve extension is not reached before the deadline in two weeks’ time, US suppliers would be banned from doing business with ZTE, which represents a huge chunk of the Chinese firms’ supply chain.

ZTE replaced three of its most senior executives last year in the wake of the situation in the US, as part of a management overhaul, and also appointed a new export compliance officer to be based in the country.

Last month, Reuters reported ZTE would slash its global workforce by around 5 per cent, including a 20 per cent reduction in the company’s handset department in China, representing a total of 3,000 jobs.