It is the largest criminal fine for the Justice Department in an export control or sanctions case.
A statement by ZTE on Tuesday said the company agreed to a criminal and civil penalty of more than $892 million. The company will plead guilty to three charges: conspiracy to unlawfully export, obstruction of justice and making false statements to federal investigators, according to a plea agreement released by the Justice Department.
"ZTE acknowledges the mistakes it made, takes responsibility for them, and remains committed to positive change in the company", Chairman and Chief Executive Zhao Xianming said Tuesday in a statement.
ZTE is expected to plead guilty in federal court in Texas as part of the settlement agreement.
The smartphone and tablet maker is accused of shipping equipment using items made in the U.S.to Iran illegally, said the Justice Department.
Commerce Secretary Wilbur Ross told reporters the action is meant to "put the world on notice that improper trade games are over with".
The investigation determined that the company has shipped $32 million worth of material to Iran without proper US export licences since 2010, and also made 283 separate shipments to North Korea during this time.
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The commerce department blocked United States exports to ZTE in March 2016 over allegations that the company re-sold goods to Iran, only to suspend that ban several times after both sides opened negotiations.
If you weren't particularly aware, the International Emergency Economic Powers Act now restricts the shipment of US-made technology to countries like Iran and North Korea.
"Those who flout our economic sanctions and export control laws will not go unpunished - they will suffer the harshest of consequences", he said.
In response, the US placed trade restrictions on the Chinese company that barred USA firms from supplying ZTE with technology equipment, although temporary reprieves were granted. The Shenzhen-based company has a USA subsidiary in Richardson, Texas.
"Despite ZTE's repeated attempts to thwart the investigation, the dogged determination of investigators uncovered damning evidence", said Douglas Hassebrock, director of the Commerce Department office that led the investigation.
The company said it was committed to making changes to become "a model for export compliance and management excellence".
Three senior officials including Zhao's predecessor had stepped down in early April 2016 after the U.S. government first sanctioned ZTE in the case.