ZTE fights back against U.S. ban


ZTE generates most of its revenue from business-to-business sales of telecom equipment and network solutions. As of Monday's close, they were worth some $19 billion. "It's rare that you go from A-OK to no transactions overnight".

The company was caught illegally selling US goods to Iran, and the US Commerce Department banned American companies from selling parts and software to ZTE for seven years.

Unlike Huawei, the Shenzhen-based ZTE would be adversely affected by the sanction inflicted on them by the United States government.

"The crippling US sanctions against ZTE may be the trigger for the next leg down in the deepening US-China trade and tech wars", said notable China watcher Bill Bishop (paywall).

The heads of the CIA, the NSA, and the Federal Bureau of Investigation, as well as the director of national intelligence and several congressmen, all spoke about the potential dangers of owning or using a mobile device from foreign companies like ZTE and Huawei during a Senate Intelligence Committee hearing.

On Friday ZTE said that the denial order would not just impact severely the development and survival of ZTE, but would cause damages to ZTE's partners including a large number of companies in the U.S.

"I never say never", the official said earlier this week.

Apart from all these, it would be interesting to see if the ZTE ban on procuring the U.S. developed foreign supplies affect its nubia sub-brand. "But there is no provision now for that to occur", the official said, speaking anonymously.

The logo of China's ZTE Corp is seen on a building in Nanjing Jiangsu province China

In its first detailed response since Washington banned the company this week from buying USA -made components for seven years, ZTE said the move will "severely impact the survival and development of ZTE". ZTE will have to reduce its business in the United States markets or even stop altogether and also in other countries all over the world, according to Woody Oh, the analyst for Strategy Analytics.

Washington has not included any "off ramp" under the terms of this week's order, the official said.

As a result, the Department of Commerce slapped ZTE with a seven-year export restriction.

But Android is software too, and it so happens that a source told Reuters that ZTE may not be able to use Google's Android in its mobile devices.

ZTE shipped 46.4 million smartphones past year, placing it seventh among Android-based manufacturers, according to research firm IHS Markit.

Google declined comment and ZTE did not respond to requests to comment. A separate company statement said the ban "threatens ZTE's existence". "During a conference call on March 6, 2018, ZTE indicated, via outside counsel, that it had made false statements in the November 30, 2016 and the July 20, 2017 letters". "We will continue to monitor the situation closely". The Chinese phone maker, which is No. 4 in the USA with about 10 percent of our market, was recently banned from using United States components by the Commerce Department because it didn't eliminate the bonuses of 35 employees caught selling electronics to Iran.

The proposed new rules from the Federal Communications Commission (FCC), meanwhile, which are expected to be finalized this year, appear to be another prong in a US effort to prevent ZTE and Huawei from gaining significant market share in the United States.

Some of the U.S companies which could be affected by this decision are Qualcomm, Google and Dolby.

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