USA ban causes ZTE to cease main operations

ZTE Business Operations Grind to a Halt Due to US Export Ban

The closure appears to be part of the cessation of "major operating activities" described by the Shenzhen-based company in a filing to the Hong Kong stock exchange on Wednesday.

Will these companies, supported by China's super-state, ramp up R&D to reduce their reliance on technology from an increasingly temperamental source?

The United States slapped ZTE with the export ban until 2025 because the company reportedly violated sanctions against Iran and North Korea. Otherwise, in the longer term, ZTE would need to find ways to restructure its business entirely around non-US suppliers such as MediaTek. The Chinese mobile giant then lied to investigators when it declared the dealings had stopped.

The company denies that it ever did these things. And ZTE's larger telecom gear-making operation probably ran afoul of the same component shortages, said Huang Leping, an analyst with CICC.

Overnight, Telstra (a large ZTE telco partner) began removing most of re-badged ZTE devices, with only 2 phones showing this morning. The company can't use Qualcomm processors, modems from Intel, and other components.




One employee said this was the "the biggest challenge" for ZTE since he joined 10 years ago. During the meetings, Chinese officials said they also raised their objections to ZTE's punishment with the US team, who they said agreed to report them to Trump. ZTE did say that it is trying to get a modification or reversal to the ban, though.

"ZTE made false statements to the U.S. Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation", U.S. Secretary of Commerce Wilbur Ross said in a statement.

The announcement comes days after ZTE said it had asked the Commerce Department's Bureau of Industry and Security to suspend the ban and had submitted extra information to bolster its case.

What Does This Mean For Consumers?

Also closed the online store ZTE.

US officials have stated that the action against ZTE was not correlated to trade policy, but the move has been seen by many in China as a part of the broader trade fight between the world's two largest economies.

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