Thursday, 24 May, 2018

Smartphone manufacturer ZTE halts business operations through United States sanctions

ZTE requests that US Department of Commerce suspend seven-year ban ZTE Halts Android Phone Sales In China Amid US Row
Heather Davidson | 10 May, 2018, 14:06

The business decision follows last month's legal issue impacting ZTE's ability to purchase components from U.S. companies.

This order prohibits United States companies, including ZTE's major suppliers such as Qualcomm and Google (for Android), from exporting their products to ZTE for a period of seven years.

The Shenzhen-based company disclosed in a regulatory filing Wednesday that "major operating activities of the Company have ceased".

The United States slapped ZTE with the export ban until 2025 because the company reportedly violated sanctions against Iran and North Korea.

ZTE has said in the exchange filings that it was actively communicating with the U.S. government "in order to facilitate the modification or reversal of the Denial Order ... and forge a positive outcome in the development of matters". In the meantime, ZTE will continue to get supply of components from Taiwanese semiconductor company MediaTek.

In the statement, ZTE explicitly says that all "major operating activities of the Company have ceased" because of the U.S. DoC's ban. Meanwhile, this is just one example of the looming US-China trade war, which heavily involves technology companies like ZTE and Huawei. Without access to its American suppliers, there is little production the company can do at the moment, as they no longer have access to the parts or services necessary to maintain their current operations. The Chinese government raised the issue of ZTE last week with a visiting US Trade Delegation.

The statement comes days after ZTE said it'd inquired the Commerce Department's Bureau of Industry and stability to suspend the ban and had filed extra info to strengthen its instance.

ZTE said that the U.S ban was unfair and threatens its survival. The company paid out a £1.2 billion (roughly Rs. 8,000 crores) nice from situation but failed to discipline employees engaged and compensated them bonuses instead. The DoC activated the ban in order to punish ZTE for failing to meet the requirements of a settlement reached past year.

"We fully understand high-tech factories' characteristic of fast-paced shipments of goods, we won't create obstacles for the pace of their exports", a trade official told Reuters on Monday.

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