ZTE Business Operations Grind to a Halt Due to US Export Banby Ryan Smith on May 9, 2018 1:10 PM EST
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After getting cut-off from American technology suppliers last month, many of us have been wondering what ZTE would do without access to so many of its critical suppliers. Now we have an answer: the company has ground to a halt.
In a brief filing submitted today on the Hong Kong Exchange, ZTE has notified investors that “As a result of the Denial Order, the major operating activities of the company have ceased.” 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.
As things stand now, the most immediate relief for ZTE would be to get the seven-year US ban modified or lifted entirely, which according to the company’s filing, they’re in the process of petitioning the US government to do just that. However given the nature of ZTE’s violations – shipping US technology to Iran and North Korea, and then lying about employee reprimands – it will be a significant battle to get the export ban meaningfully altered. Otherwise, in the longer term, ZTE would need to find ways to restructure its business entirely around non-US suppliers such as MediaTek.
In the meantime the company is still solvent according to their filing, as ZTE “maintains sufficient cash and strictly adheres to its commercial obligations subject to compliance with laws and regulations.” So while the US export ban is a massive setback for the company, it’s not outright fatal, at least so long as the company is able to resolve their problems quickly.
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Flunk - Wednesday, May 9, 2018 - linkI just can't see them reorganizing fast enough, or convincing the very slow US government to change their mind. Even if they wanted to it would take ages, and it doesn't look like they do.
Morawka - Wednesday, May 9, 2018 - linkThis company deserves to be bankrupted. They are selling advanced technologies to sponsors of terrorism. Your not even allowed to ship 3.5 Hard Drives to Iran or NK. ZTE was nuts for thinking they could ship high speed processors that use the latest american fabrication technologies and get away with it. Iran, Russia, China, NK, all have gotten extremely good at reverse engineering american technologies. It probably accounts for 3/4 of their technological progress (except maybe Russia and China).
sonny73n - Wednesday, May 9, 2018 - linkI agree that ZTE has violated some terms and agreements but according to what comes out from your pipe hole, ZTE sponsors terrorism. So Iran and NK must be terrorist states. However last time I checked both of those countries haven’t attacked anyone but the 9-11 terrorists were all from Saudi Arabia which country the US is buddy with.
By the way, most softeware engineers in the US are Chinese and Indians. Being proud of their achievements and bashing their countries at the same time are just retarded.
peevee - Thursday, May 10, 2018 - link"So Iran and NK must be terrorist states. However last time I checked both of those countries haven’t attacked anyone "
Iran sponsors Hezbollah - an organization which is terrorist according to US DoS. Hence it is a sponsor of terrorism.
NK is sanctioned for development of nuclear weapons and missiles able to deliver them.
BigDragon - Thursday, May 10, 2018 - link"So Iran and NK must be terrorist states. However last time I checked..."
Check again. The US has a list of "State Sponsors of Terrorism" which has included Iran since 1988. North Korea has been on and off the list (it's currently on again as of 2017). ZTE knew they'd raise the ire of US officials at some point -- it was inevitable. They chose not to care or take the consequences seriously. The validity and justification of the list, its effectiveness, the backgrounds of people and companies involved, engineering statistics, and other data does not change the fact that the list exists and is enforced.
Ananke - Thursday, May 10, 2018 - linkBy the way, China treats around 400,000 of its citizens involved in high tech US research as "Chinese diaspora" that would help progress their military know how above the US by 2025...India is similar, but not that open, and India doesn't claim South China Sea and almost all of commercial sea routes in the Far East :)
There is a lot of strategic mistakes done by the US in regards to transferring know-how to a very likely military opponent as China. Apparently it took the US politicians several decades to realize that this course will cost the US its influence over the Far East and Oceania, which is a basis for commercial and financial American hegemony. Regardless whether China is communists, democratic or whatever, it has a collusive path with US over the Pacific.
Hence, today politics are different than five years ago.
And ZTE is a state company directly extended from the Chinese Army and Intelligence :) btw
peevee - Thursday, May 10, 2018 - link"By the way, most softeware engineers in the US are Chinese and Indians. "
This is another BS. This might be the case in certain companies, but in general, it is about 50/50 American-born/foreign-born, and the latter includes a whole lot of Europeans (including Eastern Europeans) and Canadians.
peevee - Thursday, May 10, 2018 - link"or convincing the very slow US government to change their mind."
They did once already, and still did the same thing afterwards. If our government trusts them again, they are traitors.
BMNify - Wednesday, May 9, 2018 - linkGood, now when the Huawei investigation is complete similar sanctions will be levied on it and thus destroying these two huge Chinese state companies who have used state money to dominate around the world.
BMNify - Wednesday, May 9, 2018 - linkAlso these two companies have nearly destroyed the telecom equipment market by using Chinese state money, I would prefer Ericsson and Nokia networking than Huawei and ZTE.