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ZTE ceases main business operations following US ban

By midian182 · 10 replies
May 10, 2018
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  1. Chinese tech giant ZTE says it has ceased “major operating activities” following a ban that prevents US companies from selling hardware and software to the firm for seven years. In a filing to the Hong Kong stock exchange, ZTE said it had enough cash to maintain its commercial obligations, but the situation looks bleak for China’s second-biggest smartphone maker.

    ZTE added that it continues to communicate with relevant US government departments in the hope of modifying or reversing the Denial Order and to “forge a positive outcome in the development of the matters.”

    Last year, ZTE admitted to violating US sanctions by selling US-made technology to Iran and North Korea. The company paid $890 million in fines and said it was in the process of reprimanding the executives responsible for the scheme and would deny them their bonuses. But the company failed to live up to the promise, handing out full bonuses and only firing four employees while retaining 35 others who broke the law. In response to this "pattern of deception, false statements, and repeated violations,” the US Commerce Department issued the ban in April.

    Reports say that at least 25 percent of ZTE’s components come from US firms, such as Intel and Qualcomm, which supplies chips for its smartphones. The ban also covers Google's suite of standard Android apps.

    “The Denial Order will not only severely impact the survival and development of ZTE, but will also cause damages to all partners of ZTE including a large number of US companies,” ZTE said, at the time of the ban.

    Analysts say that even if it uses non-US suppliers, ZTE could struggle to stay afloat. Reuters reports that Taiwanese firm Mediatek received a permit from the Taiwanese government to keep selling components to ZTE.

    With the DOC opening up an investigation into similar violations of US sanctions on Iran by fellow Chinese phone maker Huawei, a full-blown trade war between America and China could already be here.

    Permalink to story.

  2. MoeJoe

    MoeJoe Banned Posts: 837   +441

    Good riddance.
  3. yRaz

    yRaz Nigerian Prince Posts: 2,894   +2,220

    I really like my ZTE ZMax pro. It's a great phone.
  4. Capaill

    Capaill TS Evangelist Posts: 902   +499

    Jesus, that was harsh. So the US obliterated an international company just because they paid bonuses when they promised they wouldn't? This is a worrying development. Most large companies depend on Intel, Oracle, Microsoft, HP, etc. That is one hell of a big stick to start waving in their faces.
    TempleOrion likes this.
  5. Lionvibez

    Lionvibez TS Evangelist Posts: 1,467   +639

    Umm no

    "pattern of deception, false statements, and repeated violations,”
  6. tipstir

    tipstir TS Ambassador Posts: 2,842   +193

    Me too it was a great cell phone!
  7. yRaz

    yRaz Nigerian Prince Posts: 2,894   +2,220

    This is the longest I've ever owned a phone. I think I've had it since summer 2016. I miss placed mine so I replaced it with the TMobile rvvil+ which is a HORRIBLE phone. The battery life and screen is great but it froze constantly. It restarted constantly, apps freeze and the screen just locks up making it in usable. I once had to wait for the battery to die on it so I could restart it.

    Once I found my ZMax pro in my car I switched back. The battery life is lower due to age and usage, but I might just buy another one...
  8. ghostf1re

    ghostf1re TS Guru Posts: 414   +265

    Go back and read the article. The company violated international sanctions on Iran and then after being caught, they lied again on how they were going to handle it. Shady business practices got them in this bind and they deserve it through and through.
  9. Darth Shiv

    Darth Shiv TS Evangelist Posts: 1,963   +577

    Came in here expecting to wave my pitchfork but after reading what went down, I'm pleasantly surprised that the action is indeed warranted. It wasn't like they didn't get plenty of opportunity to atone.
  10. ShadowDeath

    ShadowDeath TS Booster Posts: 115   +48

    There is quite a bit more to this story.


    "Back in 2012, Reuters reported that ZTE had signed contracts with Iranian telecom companies that would see ZTE devices on Iranian store shelves. However, hardware and software aspects of those devices originated in the United States, which is a blatant violation of Iranian trade embargoes instituted by the U.S. government."

    It stems from this it seems. They didn't follow through with their agreement.
    Capaill likes this.
  11. Capaill

    Capaill TS Evangelist Posts: 902   +499

    Yes, the limited article in TS suggests that they were atoning for their actions (admitted their mistake, paid the fine, fired a few people) but chose not to penalise their managers by letting them keep their bonuses. So that's why I thought the punishment was harsh.

    But on reading deeper on other sites, I read that ZTE sold hardware to Iran and N Korea for years and deliberately disguised it in order to make hundreds of millions of dollars of sales. They then repeatedly lied to the US about what they were doing. Finally, 2 years after they were caught and promised to penalise those involved, they had still done nothing and were still rewarding them, but telling the US that they had punished them. So the US took action.

    Having their entire company wiped out so immediately still feels harsh. But I guess they had a big slap coming. At least it's a lesson for everyone else: Toe the line with the US in the short term while focussing on replacing the US as a key IT player in the mid to long term.

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