ZTE Ceases Operations After US Government Ban

10 May, 2018, 11:28 | Author: Terri Saunders
  • ZTE requests that US Department of Commerce suspend seven-year ban

ZTE relies heavily on United States companies to supply as much as a third of its components.

The business decision follows last month's legal issue impacting ZTE's ability to purchase components from USA companies. The U.S. Department of Commerce has blocked it from accessing American-made components until 2025, saying the company failed to punish employees who violated trade controls against Iran and North Korea.

However, it's not certain how long ZTE, which accounted for 10% of the U.S. smartphone market past year, can hang on without its supply of chips and other technology from United States manufacturers.

ZTE said in its filing it maintains "sufficient cash" and is "actively communicating" with the United States for a modification or reversal of the order, issued by the U.S. commerce department over violations of a previous settlement regarding illegal sales of ZTE phones and equipment to Iran.

ZTE relies on USA firms for key smartphone components, including microchips from Qualcomm and glass from Corning. It could also lead to loss of their Android license, which hasn't happened yet.

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The move, according to reports, has forced the ZTE to halt sales of its smartphones in China. There's nothing inherently wrong with using MediaTek SoCs, but it will very likely take away ZTEs competitive edge in the smartphone market.

On Thursday, online ZTE stores on its website and major e-commerce platforms were "under construction".

One ZTE employee said manufacturing had ceased and workers are keeping busy with training, Nikkei reported. It's still too early to speculate the short or long-term implications of the ban, and we'll have to wait till the negotiations are over. "As of now, the company maintains sufficient cash and strictly adheres to its commercial obligations subject in compliance with laws and regulations", it added. Stock trading ZTE suspended for a few weeks, says New York Times with reference to the stock springs. The company was continuing to communicate with the US government regarding the ban, in hopes of changing or reversing the order, the filing added. Mobile operator MTN, which serves 220 million people in 22 countries of Africa and the Middle East, said that he plans for contingencies, "given our commitment to ZTE in our networks".

Selected Telstra-branded mobile devices now unavailable: Due to issues outside of our control, certain Telstra-branded mobile phones and mobile broadband devices made by ZTE are now unavailable.

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