YOU ARE AT:5GZTE suspends operating activities due to US ban

ZTE suspends operating activities due to US ban

 

The Chinese vendor said that the next two weeks will be key to find a solution to the conflict

Chinese vendor ZTE announced that it has ceased its major operating activities due to the export ban imposed by the US government.

“As a result of the denial order, the major operating activities of the company have ceased,” ZTE said in a statement to investors. ZTE’s main business units include telecommunications networks, devices and enterprise solutions.

Last month, theU.S Department of Commerce’s Bureau of Industry and Security banned American companies from selling telecommunications equipment and services 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 BIS order, which went into effect immediately, bans American firms from exporting components directly to ZTE or through a third country until March 13, 2025. The Chinese vendor previously said that its business could be heavily impacted if the company fails to reach an agreement with the U.S government over the ban.

Earlier this week, ZTE filed a request to BIS for the suspension of the ban.

“As of now, the company maintains sufficient cash and strictly adheres to its commercial obligations subject to compliance with laws and regulations. The company and related parties are actively communicating with the relevant U.S. government departments in order to facilitate the modification or reversal of the denial order by the U.S. government and forge a positive outcome in the development of the matters,” ZTE’s statement reads.

ZTE said it expects the next two weeks to be a “critical window” to find a solution to the conflict, Bloomberg reported, citing an internal email to ZTE’s managers. “The company is currently working hard to speedily resolve this impasse,” read the email. “Don’t let inaccurate information and rumours unsettle us. Stick to your posts, rally your teams, and calm your troops,” ZTE’s email reads.

In related news, Taiwan’s Ministry of Economic Affairs granted an export permit to local chip maker MediaTek, which supplies chipsets for ZTE smartphones, Chinese press reported.

Other Taiwanese companies are waiting for similar approvals from the government. Taiwanese companies were recently required to obtain an export permit before selling to ZTE after Taiwan’s Bureau of Foreign Trade classified ZTE and its subsidiary ZTE Kangxun Telecom as controlled export targets.

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.

ABOUT AUTHOR

Juan Pedro Tomás
Juan Pedro Tomás
Juan Pedro covers Global Carriers and Global Enterprise IoT. Prior to RCR, Juan Pedro worked for Business News Americas, covering telecoms and IT news in the Latin American markets. He also worked for Telecompaper as their Regional Editor for Latin America and Asia/Pacific. Juan Pedro has also contributed to Latin Trade magazine as the publication's correspondent in Argentina and with political risk consultancy firm Exclusive Analysis, writing reports and providing political and economic information from certain Latin American markets. He has a degree in International Relations and a master in Journalism and is married with two kids.

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