ZTE Ceases Operations After US Government Ban

Posted May 11, 2018

The ban prevents USA companies from supplying ZTE with technology and components, which make up a third of ZTE's requirements. The Chinese government is said to have raised the issue of ZTE last week with a visiting U.S. trade delegation.

The Commerce Department has imposed a seven-year sales ban on ZTE in a case involving exports of telecom gear to Iran and North Korea.

In the statement, ZTE explicitly says that all "major operating activities of the Company have ceased" because of the U.S. DoC's ban. "The conclusion is more a concern that relies on the negotiation amid China and the US", he added.

The possibility of losing access to critical US components has led to a great research and development push in China in recent years, as companies race to devise homegrown alternatives; suppliers in Japan and South Korea lack the capacity to provide all the components China needs.

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Last week, Chinese mediator while addressing related trade talks with the USA correspondents in Beijing asked the United States to heed ZTE's plea, and take into consideration the company's attempts to modify the ban and advance its compliance.

Several employees of ZTE described the situation within the company on condition of anonymity, fearing reprisals from his employer.

The US placed a ban on American companies exporting goods to ZTE after the Chinese firm violated previous sanctions.

Consumer Cellular Inc, a USA wireless operator, said ZTE was unable to continue supplying phones after the sanctions, but had asked the company to hold inventory spots open as it worked to resolve the export ban, said Consumer Cellular Chief Executive John Marick in an interview.

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The company has been scrambling since the ban, reportedly meeting with Google to determine if there's some workaround to what might effectively end its use of Android and Play services.

"ZTE's false statements only were reported to the U.S. Government after BIS requested information and documentation showing that employee discipline had occurred". The ban is set to last 7 years, but ZTE has feverishly contested the ruling, claiming that the ban would irreversibly damage the brand. Acacia shares are down greater than 30% for the reason that USA authorities banned ZTE from shopping for.

No products were listed on ZTE's official online store on e-commerce platform Tmall and the website said it was "undergoing revision".

We've reached out to ZTE for further comment on the matter.

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