Cisco has ended a sales partnership with ZTE, after the Chinese technology firm was accused of selling Cisco networking equipment to Iran despite US sanctions against the country. Cisco's decision became public just as a Congressional report yesterday claimed Chinese companies ZTE and Huawei pose a security threat to the US and can't be trusted to comply with US and international law.

Reuters exposed ZTE's sales to Iranian telecom firm TCI in articles earlier this year, and reported Cisco's decision to cut ties with ZTE yesterday. ZTE "sold banned computer equipment from Cisco and other US companies to Iran's largest telecom firm," Reuters reported, adding that "ZTE also agreed last year to ship millions of dollars worth of additional US tech products, including Cisco switches, to a unit of the consortium that controls the telecom firm."

Cisco CEO John Chambers is quoted as saying that Cisco does not "tolerate any direct or indirect" sales of Cisco products to Iran and other countries facing US sales embargoes. "And when that occurs, we step up and deal with it very firmly," Chambers told Reuters. "So I think you can assume that you will not see that happen again."

ZTE is trying to get back on the good side of Cisco and the US government. ZTE spokesman David Dai Shu told Reuters that "ZTE is highly concerned with the matter and is communicating with Cisco. At the same time, ZTE is actively cooperating with the US government about the probe to Iran. We believe it will be properly addressed."

Cisco used its partnership with ZTE to boost its competitiveness against Huawei in certain foreign markets. According to Reuters, an unnamed former Cisco executive said, "we would license technology to ZTE and they would produce equipment locally, and we could therefore have a range of equipment in the marketplace that would be cost-competitive with Huawei."

Yesterday's congressional report also lends credence to claims that Huawei used Cisco's patented technology in its products.