ZTE falls victim in United States trade war as it halts sales

Posted May 10, 2018

ZTE said on Wednesday in a public filing that it has halted "major operating activities" after a USA ban against the company became effective.

That said, the American government now believes that ZTE lied and the majority of its employees weren't formally reprimanded until earlier this year - contrary to what was stated in the denial order issued by the U.S. Department of Commerce.

Although ZTE is closed, it is still trying to have the ban modified or reversed. Analysts predict it will be hard for ZTE to stay competitive without supply of components from American suppliers.

Remember, as you possibly feel bad for ZTE in all of this - the reason they got this USA supply ban was because they lied about paying bonuses to workers.

However the company stated that it still has enough money to fulfil its commercial obligations, and is communicating with the United States government to try and modify or reverse the blocking order.

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The ban that threatens to cut off ZTE's supply chain came amid heightened tension over a possible U.S.

As a result, the USA issued its denial order, forbidding ZTE from buying chips from companies such as Intel (intc) and Qualcomm (qcom), and optical components from Lumentum.

ZTE was accused by the U.S. Department of Commerce of illegally shipping U.S. equipment to Iran and North Korea.

The US Department of Commerce's Bureau of Industry and Security (BIS) in April imposed the denial of export privileges against ZTE.

The Chinese firm did not respond to calls and messages from Reuters seeking comment. ZTE is also said to be unable to continue supplying phones after sanctions were imposed, says US-based wireless operator Consumer Cellular Inc. It depends on United States parts: chips made from California-based Qualcomm account for more than half of its phones shipped globally and nearly all of its phones in the USA, according to Counterpoint.

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The actions include a committee focusing in compliance, which is overseen by ZTE's CEO and experts in the matter, along with additional training for staff. ZTE said it has learned from, "past experiences on export control compliance". The employee, who declined to be named, said business trips had been halted.

One employee said this was the "the biggest challenge" for ZTE since he joined 10 years ago.

In light of the growing rift between China and the U.S., Chinese President Xi Jinping is urging the country to become more independent in terms of information technology.

Even a USA delegation went to Beijing last week to explore the brewing trade battle with their Chinese counterparts.

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