ZTE's United States ban set to be lifted

Posted May 14, 2018

In remarks that left many puzzled earlier Sunday, Trump said he was working with Beijing to get Chinese telecommunications giant ZTE "back into business".

But Trump has now said he is working with China's President Xi Jinping to save the company.

"Too many jobs in China lost", he said. The U.S. Commerce Department barred American companies from selling components to ZTE in April after it violated sanctions on Iran and North Korea and then misled the department. In this case, ZTE's infringements are so major - trade violations and national security concerns - that it is hard to envisage the company getting a pass, even with support from the White House.

Trump's reversal will likely have a significant impact on ZTE's USA suppliers such as Qualcomm Inc and Intel Corp.

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"Major operating activities of the company have ceased" as a result of the United States decision, it said in a filing Wednesday.

The Chinese company sells smartphones and telecommunications equipment around the world and was slapped with the seven-year export ban because the Chinese company lied to American officials about punishing employees who violated US sanctions on North Korea and Iran.

"The extent of the impact of the Commerce Department ban on United States suppliers was noted by the ZTE official, who was not authorized to speak publicly, as Chinese and U.S. government officials discuss a Washington visit next week by China's top economic [envoy Liu He for the second round of trade talks]".

The company recently said that it would cease "major operating activities" because of the US government's recent trade restrictions.

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ZTE depended on American chips and other components, and is unable to continue operating without key supplies.

Last week, the company said that its earnings have surged, reporting a 39 percent jump in net income for the first quarter.

Beijing has closely followed the developments around ZTE, a company with 80,000 employees headquartered in southern China.

ZTE is not among Qualcomm's publicly disclosed largest customers, which include Apple Inc, Samsung Electronics Co Ltd and Chinese smartphone makers Oppo and Vivo.

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Despite the offer to help ZTE, trade tensions between the US and China remain sky high. Last week, Telstra said it would stop sales of ZTE smartphones, though it indicated it was "hopeful that ZTE will be able to reach a resolution to this matter soon so that we can recommence selling Telstra-branded ZTE devices". ZTE provides services for 100 million users in India, 300 million users in Indonesia, and 29 million users in Italy, the official said.