ZTE says U.S. ban will 'severely impact' its survival and partnerships

Delia Walker
April 27, 2018

While ZTE did fire the executives, they took no action against the other 35, bringing us to where we are today. Still, another setback in the USA market could cause Huawei to throw in the towel and concentrate on other regions. Somewhat fueled by the fact that the founder of the company once worked for the Chinese government.

Hon Hai Precision Industry, the world's largest contract manufacturer for consumer electronics, also known as Foxconn, is Huawei's largest supplier. Under the ban, the China-based smartphone maker can't get hold of Qualcomm chips and it stands to lose its license to use Android. Huawei does at least make its own Kirin mobile chips.

ZTE has also been faced with similar heat, albeit more damaging as the Department of Commerce hit it with a seven-year ban from using any software or hardware components that are exported from the United States - effectively stopping its smartphone business in the country.

That is in stark contrast with ZTE, the Shenzhen-based telecommunications equipment maker that is both Huawei's competitor and comrade in the global technology race.

U.S. prosecutors in NY have been investigating whether Chinese tech company Huawei violated United States sanctions in relation to Iran, according to sources familiar with the situation. Neither the Justice Department nor Huawei have confirmed that the investigations are taking place.

The government's order, which went into effect immediately, bans American firms from exporting components directly to ZTE or through a third country until March 13, 2025.

"ZTE will not give up its efforts to resolve the issue through communication, and we are also determined, if necessary, to take judicial measures to protect the legal rights and interests of our Company, our employees and our shareholders, and to fulfill obligations and take responsibilities to our global customers, end-users, partners and suppliers", said ZTE.

Huawei is not the first Chinese company to be investigated for violating Iran sanctions.

Huawei was originally set to launch its Mate 10 Pro handset in the US through major US carrier AT&T earlier this year, although the latter later backed out of the agreement following cybersecurity concerns raised by members of the US Senate and House intelligence committees.

The Justice Department probe is being run out of the U.S. attorney's office in Brooklyn, the sources said.

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