ZTE Ceases Major Operations in the US Following Ban
There's more trouble for the Chinese telecommunication giant ZTE, as is in the process of ceasing all major operations in the US. ZTE settled a case with the U.S. government last March after admitting to illegally shipping products with U.S. technology to countries including Iran and paying a record fine of nearly $900 million. The out-of-court settlement demanded that the company take action against the employees responsible for the leak, but the company failed to do so, which resulted in a ban that forbids U.S. firms from supplying it with components and technology.
The company says that it's working with the US government to get the ban reversed, but there's no progress on that front so far. In a statement to Reuters, ZTE said it was actively communicating with the U.S. government “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 matters.”
The fate of ZTE's Android license is still unknown
The ban will hurt the company's smartphone division immensely as it forbids it from using Qualcomm chips in their devices. It could also lead to loss of their Android license, which hasn't happened yet. Without Qualcomm hardware, ZTE devices stand to lose their competitive edge, as they'll be forced to use chips made by MediaTek, as the only other alternative is Huawei-owned Hisilicon, who don't plan on releasing their SoCs for other companies. There's nothing inherently wrong with using MediaTek SoCs, but it will very likely take away ZTEs competitive edge in the smartphone market.
ZTE appears to have suspended its online stores on its website as well as on Alibaba Group’s e-commerce platform Taobao over the past few days. A ZTE employee also mentioned that employees are reporting to work as usual, but “with not much to do.” It's still too early to speculate the short or long-term implications of the ban, and we'll have to wait till the negotiations are over.