A few weeks after the US Department of Commerce blocked US companies from supplying Chinese electronics company ZTE with components, ZTE has issued a notice to investors stating that the company is pretty much on life support while it challenges that action.

ZTE says “the major operating activities of the company have ceased,” but that the company does have enough cash on hand to stick “to its commercial obligations” for the time being.

Meanwhile, ZTE is in talks with US officials about what it would take to get the ban lifted. Right now it’s scheduled to stay in place for the next 7 years, which could be devastating for a company that reportedly gets about 30 percent of its components from US companies.

I’m also not sure if anyone has figured out whether Google’s Android operating system is covered by the ban. While Android is an open source operating system that anyone can use free of charge, Google does work with device makers to certify their phones, tablets, and other gadgets before making proprietary apps and services including Google Play available.

The ban on sale of US goods to ZTE is the latest fallout from a prior ruling by US regulators that ZTE had violated a trade ban by selling devices with components from US companies in Iran and North Korea. ZTE agreed to take a set of actions including reprimanding a number of key employees. In April Commerce Department officials announced that ZTE had not kept its part of the bargain and that US companies would be banned from selling products to ZTE for 7 years.

This all comes at a time when ZTE and rival Chinese phone maker and telecommunications company Huawei are under scrutiny from US lawmakers and regulators who have concerns about the level of influence these companies have in the US… and the security implications of relying on Chinese companies to provide technology used by wireless carriers.

via Reuters

Support Liliputing

Liliputing's primary sources of revenue are advertising and affiliate links (if you click the "Shop" button at the top of the page and buy something on Amazon, for example, we'll get a small commission).

But there are several ways you can support the site directly even if you're using an ad blocker* and hate online shopping.

Contribute to our Patreon campaign

or...

Contribute via PayPal

* If you are using an ad blocker like uBlock Origin and seeing a pop-up message at the bottom of the screen, we have a guide that may help you disable it.

Subscribe to Liliputing via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 9,545 other subscribers

3 replies on “ZTE suspends “major operating activities” following US trade ban”

  1. Wow, they gave up really quick. I understand that 30% is a sizable amount of phones, but couldn’t they downsize the company and survive off the other 70%? Plus, as mentioned in the previous article, Android is open source. The Google Apps are restricted, but they’re not necessary to sell phones in many parts of the world.

Comments are closed.