US bans suppliers from selling components to ZTE

By Greg S ยท 8 replies
Apr 16, 2018
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  1. Following skepticism from US government officials directed towards Chinese smartphone makers, the Department of Commerce has banned all United States businesses from selling components to ZTE Corporation for seven years.

    Last year, ZTE pleaded guilty to violating US sanctions by covertly providing technology to Iran. So far, $890 million has been paid in penalties and fines for the incident, leaving another $300 million that could still be levied against ZTE. Four senior level employees were fired over the matter. Promises were made to take disciplinary action against another 35 employees by slashing bonuses. No action has been taken by ZTE against the additional 35 employees to date despite promises.

    In response to the breach of trust, the United States has opted to temporarily ban all trade between ZTE and American companies. According to lawyer Douglas Jacobson representing many of ZTE's suppliers, the ban is "highly unusual" and "is going to tank their stock".

    It is estimated that US businesses provide as many as 30 percent of the components found in ZTE's products. Notable suppliers include Intel, Qualcomm, and Microsoft. At a time when 5G technology is under development, this could be a major setback for ZTE's telecom and networking equipment products.

    Tensions continue to rise between the United States and China over tariffs on technology items. In this instance, US suppliers are also losing out on potential sales, but ZTE is left with few options to obtain current generation hardware developed outside of China. As policies are changed, purchasing consumer tech products could become a little more difficult for some should further restrictions be implemented.

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  2. MoeJoe

    MoeJoe TS Guru Posts: 774   +399

    Good
     
    senketsu likes this.
  3. p51d007

    p51d007 TS Evangelist Posts: 1,386   +706

    Don't play fair, you should be penalized.
    As long as everyone is playing in a level playing field.
     
  4. Uncle Al

    Uncle Al TS Evangelist Posts: 3,752   +2,289

    And now it finally begins ....... I'm curious to see how much of this stuff goes through 3rd party countries to avoid the tariffs as well as the overall impact on the cost of goods sold in the US. I don't think it's going to be pretty ......
     
    crocography and TempleOrion like this.
  5. Nocturne

    Nocturne TS Rookie Posts: 27   +14

    I don't think this will effect them as much as the government hopes, China is the king of knock offs. While these companies can't be supplied products, in all technically you they can make their own or contract a plant in China to make the parts based on a patent agreement, still this is great for computers as the cell industry is due to demand hiking the price of dram. Less companies supplied frees up machinery for fabs.
     
  6. SirChocula

    SirChocula TS Addict Posts: 139   +125

    Damn it, I hope this doesn't affect the pricing or availability of the ZTE Axon 9. I'm looking at that for my new phone.
     
    crocography likes this.
  7. hqxt1964

    hqxt1964 TS Member Posts: 50   +15

    This has had a big impact on zte, even though zte has more patents, and most of its chips and components come from U.S. manufacturers.
     
  8. hqxt1964

    hqxt1964 TS Member Posts: 50   +15

    The United States can break down the supply chain and force you to comply with their rules. In the long run, it may not be a good thing for them to push Chinese companies to seek domestic alternatives.
     
  9. mailpup

    mailpup TS Special Forces Posts: 7,180   +505

    They might have done it anyway but now they have an incentive to it sooner rather than later.
     

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