Publicado: Lun, May 14, 2018
Financiera | Por Marilu Caballero

US President Donald Trump says working on to solve ZTE issue

US President Donald Trump says working on to solve ZTE issue

In this case, ZTE's infringements are so major - trade violations and national security concerns - that it is hard to envisage the company getting a pass, even with support from the White House.

ZTE is the second-largest telecom equipment maker in China and generated $17 billion in revenue in 2017.

In April, the Commerce Department penalized ZTE for violating a settlement with the US government over illegal shipments to Iran and North Korea.

This was a result of shipments to Iran and North Korea, which ZTE has admitted it made, violating trade sanctions on those countries. ZTE added that the company continues to communicate with the USA government with the goal of modifying or reversing the order. In a statement Wednesday, ZTE said "the major operating activities of the company have ceased".

ZTE did not immediately respond to a request for comment.

President Donald Trump on Sunday expressed confidence that the USA and China would be able to get over their differences on trade, saying that both governments are "working well together" on the issue. As a result, the Trump administration barred USA firms for seven years from exporting parts to ZTE, the fourth-largest smartphone manufacturer in China, including critical microchips.

Companies in the USA are estimated to provide up to 30% of the components used in ZTE's products, which includes smartphones and complex equipment for telecommunications networks.

The US action could be devastating to ZTE.

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The firm suspended operations earlier this month after USA authorities banned American companies from supplying to it.

Last week, the company said that its earnings have surged, reporting a 39 percent jump in net income for the first quarter.

Against that background, the Trump administration has barred military and government employees from using smartphones from ZTE and fellow Chinese maker Huawei.

ZTE's troubles with the US government are also playing out amid broader fears of an ascendant Chinese tech industry.

For instance, MTN, a South Africa-based wireless carrier with 220 million customers throughout Africa and the Middle East, said the possibility ZTE would collapse forced the carrier to develop contingency plans. The company's R&D expenditure a year ago stood at 12.96 billion yuan, which accounted for about 11.9 percent of the company's operating revenue.

The ban also makes ZTE unable to renew its Android licensing agreement with Google, effectively killing its handset ambitions in every segment of the market.

Chinese Vice Premier Liu He is expected to resume trade talks with the Trump administration this week, after discussions in Beijing last week yielded no agreement on a long list of U.S. trade demands.

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