MediaTek said it will need to obtan government permission to resume shipments to the Chinese vendor
Taiwanese chip maker MediaTek confirmed that it has suspended delivery of products to Chinese vendor ZTE, after Taiwanese authorities issued an order for all the country’s companies to temporarily end trading with the Chinese telecommunications equipment maker.
Last week, MediaTek received a notice from the Ministry of Economic Affairs’ Bureau of Foreign Trade, highlighting that all Taiwanese firms need to submit applications before shipping products or components to ZTE. The chip maker said that it is currently working to prepare all documents and information required for the application and expects to secure the approval from the Taiwanese government as soon as possible.
MediaTek supplies chipsets to both ZTE and Huawei. The Taiwanese firm also supplies mobile chipsets to nearly all Chinese smartphone makers, including Lenovo Group, Oppo, Vivo and Xiaomi.
According to an estimation from research firm Bernstein Research, sales to ZTE currently accounts less than 2% of MediaTek’s overall sales.
“We received a notice from the Taiwanese government to stop supplying to ZTE for now,” the company’s CEO Rick Tsai, said during a conference call with investors. “We hope the dispute will be settled soon, although we currently see limited impact on our business,” he said.
“Our company is actively preparing related documents to apply for an export permit to ZTE,” MediaTek said in a recent stock exchange filing. “With hopes that we can quickly obtain the export permit, we will then follow the law and proceed with smooth shipping.”
Last month, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) banned American companies from selling telecommunications equipment to ZTE after the firm allegedly did not live up to the terms of an agreement that had been worked out after it illegally shipped telecom equipment to Iran and North Korea.
The government’s order, which went into effect immediately, bans American firms from exporting components directly to ZTE or through a third country until March 13, 2025.
ZTE said that a U.S. ban on the sale of components and software to the company is unfair and threatens its survival but will also potentially affect the interests of a number of U.S firms.
Some of the U.S companies which could be affected by this decision are Qualcomm, Google and Dolby.
Last week, the U.S Department of Commerce said will allow ZTE to present additional evidence regarding this case. The U.S agency has agreed to receive new evidence from ZTE through an informal procedure. Under the agency’s regulations, ZTE would not be able to make a formal appeal regarding the ban.
