Published: Sat, May 12, 2018
Finance | By Claude Patterson

ZTE Stops Major Operations Following US Export Ban

ZTE Stops Major Operations Following US Export Ban

Chinese telecom giant ZTE faces a grim future after ceasing major operations due to a United States ban on American sales of critical technology to the company, raising the stakes in a trade spat between the world's two largest economies.

ZTE paid over $100 million each to other USA suppliers in 2017 including chip makers Xilinx Inc and optical component company Acacia Communications and memory chip maker Sandisk, the ZTE official said.

The Presidential Memorandum also claimed that China "directs and facilitates" the investment in and acquisition of U.S. companies for technology transfer purposes according to the Chinese government's plans. As a result, ZTE suspended its main operating activities earlier this month.

"Otherwise, we will kill you".

"The company started building its own OS after a USA investigation into Huawei and in 2012".

ZTE is one of the world's biggest telecommunications equipment makers.

Beijing has been closely following the developments around ZTE, a company with 80,000 employees and which is headquartered in southern China.

The US action could be devastating to ZTE.

Last month, the USA government reactivated the ban after it said ZTE violated terms of the settlement and made repeated false statements, which ZTE disputed.

In Beijing, officials see the ban as part and parcel of the Trump administration's hardline trade demands. "China sets aside up to 70 percent of its mobile infrastructure market for Huawei and ZTE, only allowing Western vendors to compete for the remainder", the alleged government memo says.

"China must rely on itself for core technologies", President Xi Jinping told scientists as he visited an IT firm last month, while officials confirmed they were raising a huge new fund to invest in computer chips. "The company and related parties are actively communicating with the relevant U.S. government departments in order to facilitate the modification or reversal of the Denial Order by the USA government and forge a positive outcome in the development of the matters".

The company, which is also the world's biggest telecommunications equipment manufacturer, would ditch Google's platform amid reports that it is under investigation by the USA for breaching sanctions against Iran, the South China Morning Post on Sunday.

"As of now, the company maintains sufficient cash and strictly adheres to its commercial obligations subject in compliance with laws and regulations", ZTE said. Trading of its Hong Kong and Shenzhen-listed shares has been halted since the USA decision.

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