ZTE has virtually shut down
Despite many things being made in China nowadays, if you’re a multi-billion dollar company you still rely on a lot of US-made gear and tech to stay in business. ZTE is proof of this, and because of the trade ban imposed on the company by the US Department of Commerce that forbids it from using ANY tech or hardware made or is licensed by a US company, it has essentially closed up shop.
Without access to licenses and hardware that make their networks and their phones work, ZTE has shut down, and has stated in a Hong Kong Stock Exchange filing that “as a result of the Denial Order, the major operating activities of the company have ceased. As of now, the company maintains sufficient cash and strictly adheres to its commercial obligations subject to compliance with laws and regulations.”
While the company is still trying to get the ban reversed, the company has shut down its online website and pulled its listings from Chinese retailers. ZTE extensively uses Qualcomm chips in its phones as well as other US-made tech in its network gear, as well as the Android Operating system made by Google.
ZTE may get a reprieve via President Donal Trump. In an earlier tweet, Trump said that he and President Xi of China are looking into getting ZTE back into business, fast.
President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!
— Donald J. Trump (@realDonaldTrump) May 13, 2018
ZTE’s predicament stems from the company’s sales of goods and services to Iran and North Korea, which reportedly violated US Sanctions. The ban will be in place for around 7 years, and expires in 2025.
ZTE’s fate is a warning to anyone that crosses the US’ path. Huawei is another Chinese company that could be the next viction of a US trade ban, as the US says it’s also investigating the company for violating US sanctions against Iran. Earlier this year AT&T dropped a deal with the Chinese company to sell their phones in the US. While the company has not detailed the reasons why, it’s believed that a letter from a group of lawmakers to the FCC about Huawei’s close ties to the Chinese government and potential spying concerns was the one responsible for torpedoing the deal.
Huawei will have a better chance of weathering a US ban, for several reasons: it relies on a mostly domestic supply chain and produces its own Kirin chips though the company is still reliant on Andriod for its OS. Rumors say that the company has been developing their own OS to use if push comes to shove though.
