ZTE has ceased its main business operations after a U.S. export ban cut ZTE off from several of its primary component suppliers. Though ZTE’s employees are still reporting to work, the company is at a standstill as it seeks to have the export ban modified or repealed. Though ZTE has been unsuccessful in its attempts to fight the ban, the situation is becoming political. As the U.S. and China skirt the possibility of a trade war, the ZTE situation throws a new complication into the mix.
ZTE was accused by the U.S. Department of Commerce of illegally shipping U.S. equipment to Iran and North Korea. The company admitted to the accusations in March 2017 and settled the case by paying a fine of nearly $900 million. But ZTE reportedly failed to follow the stipulations of the settlement when it provided bonuses to those employees involved in illegal activities who were allowed to remain employed by ZTE.
In response, the U.S. Department of Commerce issued a ban on U.S. companies selling components to ZTE. The ban has been in effect for over three weeks and ZTE is hurting. The company is unable to source critical components from U.S. suppliers like Qualcomm and Intel.
We’ll keep you posted as this situation continues to unfold. What are your thoughts on ZTE’s predicament? Is the export ban against the company fair?