The Chinese telecommunications company ZTE has announced that it will reduce trade with Iran, after a Reuters report on Thursday revealed that it has sold a powerful surveillance system to Iran that’s capable of monitoring telephone and internet communications.

The Reuters report indicated that ZTE, the second-largest Chinese telecom equipment maker, had signed a $130-million contract with Iran in 2010, which included the delivery of the powerful surveillance system.

On Friday, ZTE spokesman David Shu said in an interview: “We are going to curtail our business in Iran.”

Reuters also alleges that the “Packing List” for the ZTE contract with Iran includes several American hardware and software products, despite a longstanding U.S. ban on selling such products to Iran.

The report has put the U.S. makers of these products on the spot, companies such as Microsoft, HP and Dell. They have basically denied knowledge of the connection to Iran and say they are investigating the matter.

According to the ZTE spokesman, the decision to curtail business with Iran was taken a while ago but the details have not yet been determined.

However, other tech equipment companies such as Ericsson, Nokia Siemens Networks and Huawei Technologies have also announced that they are cutting back on their dealings with Iran.

On Friday, the EU member states agreed to ban the sale of telecommunications equipment to Iran if it can be used for repression.