The preliminary deal includes a $US1 billion fine against ZTE plus $US400 million in escrow in the event of future violations, sources said, adding that the terms were in line with Reuters reporting on the US demands on Friday.

The Commerce Department plans to amend its settlement agreement from last year and count the $US361 million ZTE paid as a part of that, allowing the US to claim a total penalty of as much as $US1.7 billion, sources said.

Over the weekend, ZTE signed the agreement in principle drawn up by the United States, but the amended settlement agreement has not been signed, sources said.

As part of the deal, ZTE must also allow unfettered site visits to verify that US components are being used as claimed by the company, post calculations of the US components in its products on a public website, and replace its board and executive team in 30 days, sources said.