Export ban on ZTE by USA will hurt Qualcomm and others

Export ban on ZTE by USA will hurt Qualcomm and others

Chinese vendor ZTE's business could be heavily impacted if the company fails to reach an agreement with the U.S government over a ban which prohibits U.S companies from exporting components to ZTE for a seven-year period, Earl Lum of EJL Wireless Research told RCR Wireless News.

The Chinese are now rallying around the phone company ZTE response to a USA ban on sales of components to the Chinese company.

Chinese smartphone maker ZTE Corp's USA woes deepened on Tuesday, as regulators proposed new rules that could cut into its sales, while a supply ban means it may not be able to use Android software in its devices, according to a source.

About a year ago, ZTE pleaded guilty to violating USA sanctions against Iran and North Korea.

One state-run Chinese newspaper, the Global Times, said in an article this week that the US actions against ZTE is a cause for China to bolster its production of smartphone chips.

"The Trump administration's stance against Huawei and ZTE is very much in line with its antagonistic approach to trade policy with China", Michael Plouffe, a lecturer in global political economy at University College London (UCL), told DW. More recently there is debate over whether this includes the free licence for Android, or perhaps more likely whether they could continue to use the open-source Android components but exclude all of Google's services including the Play Store.

ZTE shipped 46.4 million smartphones a year ago, placing it seventh among Android-based manufacturers, according to research firm IHS Markit. ZTE did not respond to calls and emails seeking comment.

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Officials at two US wireless carriers said on Wednesday that they were still assessing how the ban would affect their customers.

ZTE, one of the world's largest telecommunications companies, has been having a rough time over the last few days.

It is not clear what percentage of ZTE smartphones are based on Qualcomm Snapdragon processors but if it is half and the chips can command a price of $25 it would represent a potential loss of $500 million in sales. United Kingdom concerns regarding ZTE are similar to ones that the US Government has against Chinese equipment providers (including Huawei) and are mostly centered around claimed links to the Chinese government and new laws that allow them to pressure local companies in ways that could be used for foreign surveillance or penetration.

The Commerce Department initially banned USA companies from selling to ZTE in 2016 after the Chinese company was caught shipping equipment with US components to Iran in violation of US export controls.

The moves threaten to further complicate relations between the United States and China.

Both ZTE and Huawei were accused of making telecommunications equipment that poses national security threats, according to a report released by US' House Intelligence Committee in 2012. The company has spent billions of dollars licensing technology from USA partners, he said.