ibusinesslines.com October 21, 2018

China's ZTE Teeters as US Ban Organizing Operations

12 May 2018, 11:22 | Justin Tyler

China's ZTE Teeters as US Ban Organizing Operations

Shanghai ZTE Corporation R&D Center

Following the latest export ban, ZTE has said "the major operating activities of the company have ceased" while it attempts to have the sanctions removed or modified.

The US Department of Commerce has against ZTE for alleged violations of the US Export Administration Regulations.

Another Chinese player, ZTE, paid $892 million in fines for exporting U.S. tech to Iran a year ago. The Defense Department last month ordered military exchanges to end the sale of ZTE phones on US bases.

The Commerce Department ban on US suppliers exporting goods to the Chinese network equipment and handset maker was discussed when a delegation led by US Treasury Secretary Steven Mnuchin met with Chinese officials in Beijing last week.

US President Donald Trump had started a trade war with China in March, imposing higher tariffs after saying an investigation by Trade Representative Robert Lighthizer had found that China is using foreign ownership restrictions to require tech transfers from US to Chinese companies, as well as conducting espionage to acquire intellectual property.

The company, which is also the world's biggest telecommunications equipment manufacturer, would ditch Google's platform amid reports that it is under investigation by the United States for breaching sanctions against Iran, the South China Morning Post on Sunday.

Others, meanwhile, indicated they continued to evaluate the impact of the ban and subsequent shutdown, including AT&T, the top distributor of ZTE phones in the US, and South African telecom giant MTN. The order was causing "irreparable harm" to the company and partners, as well as millions of consumers, including those who own its phones and major network operators, the person said.

The proposed Fair Trade with China Enforcement Act would also block government or contractors from buying telecommunications equipment and services from Chinese tech giants ZTE and Huawei.

ZTE also sells handsets to U.S. mobile carriers including AT&T, T-Mobile and Sprint.

Qualcomm last month said it expected lost sales to ZTE to lower its earnings by 3 cents per share in the current quarter.

None of the other companies could immediately be reached for comment. ZTE had plans to become one of the first vendors in America to offer a smartphone connected to the next-generation wireless network known as 5G.

"ZTE is undertaking a complete stock take of all units potentially impacted by the Denial Order", Digicel said.

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