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ZTE has ceased 'major operating activities' due to United States supply ban

10 May 2018
ZTE has ceased 'major operating activities' due to United States supply ban

The ban was issued by the U.S. Commerce Department in April, after the U.S. government said ZTE network equipment could pose a risk to national security.

"We will also assure them that should this change we will contact them to step them through their options", she said. The ban was imposed after ZTE was found guilty of violating U.S. export restrictions.

China's second-biggest telecom equipment company, ZTE, announced that it will immediately close down its main domestic and global operations. In a glimmer of hope, Taiwanese firm Mediatek has obtained a permit from the Taiwanese government to continue to supply the company with its components.

Chinese electronics giant ZTE Corp. announced Wednesday that it has ceased major operating activities in the USA following a seven-year ban that forbids US companies from supplying ZTE with components.

Australia's largest telco said that the US Government's denial order, which was issued last month and prohibits US companies from selling device components and software to ZTE, now prevents ZTE from manufacturing devices for Telstra's range. However given the nature of ZTE's violations - shipping U.S. 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. Analysts predict it will be hard for ZTE to stay competitive without supply of components from American suppliers.

ZTE sent an internal memo to its employees stating that the firm has been "proactively communicating with relevant departments of the U.S government", according to the South China Morning Post. During the meetings, Chinese officials said they also raised their objections to ZTE's punishment with the USA team, who they said agreed to report them to Trump. ZTE also agreed to a seven-year suspended denial of export privileges.

ZTE said in an exchange filing it "maintains sufficient cash" for now and will meet its commercial obligations. The employee, who declined to be named, said business trips had been halted. The company was continuing to communicate with the USA government regarding the ban, in hopes of changing or reversing the order, the filing added. Qualcomm has been supplying the silicon used in ZTE's flagship phones for years, but this ban has killed any future sales. The Commerce Department said that the ban has been imposed after it found ZTE to have violated USA export restrictions by illegally shipping to Iran.