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ZTE ceases "major operating activities", may be on the way out

10 May, 2018, 14:09 | Author: Melinda Barton
  • ZTE requests that US Department of Commerce suspend seven-year ban

The ban imposed on ZTE by the Department of Commerce makes it illegal for USA companies to sell any products and services to the company; but how did it reach this stage?

The news was revealed in a press release which noted that, "the major operating activities of the Company have ceased".

"This was a hard but necessary decision given ZTE's decision to cease major operating activities and we apologise that this will result in a temporary reduction in device options for customers", Telstra consumer and small business head of innovation, product innovation and strategy Michelle Garra said in a blog post on 10 May.

The company said it had enough cash to meet current orders and it was in communications with United States government officials in an attempt to reverse the ban.

ZTE "maintains adequate money and rigorously adheres to the own commercial obligations subject to compliance with regulations and laws", it said from the announcement issued into the Hong Kong stock market. Those companies include San Diego-based Qualcomm, which supplies processors for more than half of ZTE's smartphones, per Quartz. Like ZTE before it, Huawei is reportedly under investigation in the USA for violating sanctions against Iran. The announcement comes less than a month after the USA banned American firms from selling hardware and software to ZTE for seven years, effectively cutting off the company's supply chain. ZTE settled the sanction case with the US government last March after admitting to illegally shipping products with USA technology to countries including Iran and paying a record fine of almost $900 million.

ZTE submitted a request to the United States Commerce Department to change the ban.


ZTE wasn't kidding around when it suggested that a U.S. Department of Commerce order would "severely impact" its survival.

Several employees of ZTE described the situation within the company on condition of anonymity, fearing reprisals from his employer. The company was forced to pay a $1.2 billion fine, fired four senior employees and hit 35 others with wage and bonus restrictions.

The ban, which effectively cuts off much of ZTE's supply chain, came amid heightened tension over a possible US-China trade war.

We'll keep you posted as this situation continues to unfold.

Although it might be too late for ZTE, if this hostile trend continues, there will be more casualties in between, but eventually, China will look closer to home to fulfill its technology needs, and the USA will miss out.

One ZTE employee said manufacturing had ceased and workers are keeping busy with training, Nikkei reported.

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