Sunday, 20 May, 2018

ZTE to suffer huge losses due to export ban from US

U.S. companies banned from selling components to ZTE		
		
	Brian Heater

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   	7 hours U.S. companies banned from selling components to ZTE Brian Heater @ 7 hours
Pete Mitchell | 17 April, 2018, 20:19

The ban on sales by American companies to ZTE, China's largest-listed telecommunications equipment manufacturer, is punishment following the charges that the equipment maker allegedly made false statements during an investigation into sales of its equipment to Iran. "Instead of reprimanding ZTE staff and senior management, ZTE rewarded them".

And although the White House and the Committee of Foreign Investment in the United States has moved against China in recent weeks, it insisted that the new decision to block ZTE - already under investigation by the Barack Obama administration - is part of a backlash against the country which also includes countries such as Germany, Australia and Canada.

The move, first reported by Reuters, comes at a time when the two countries have threatened each other with tens of billions of dollars in tariffs in recent weeks, fanning worries of a full blown trade war that threatens global supply chains as well as business investment plans.

Washington has also deepened its scrutiny of Chinese investment in the US, with the Committee on Foreign Investment in the United States (CFIUS), blocking many proposed acquisitions of USA assets by Chinese companies.

The company's initial guilty plea was met with up to $1.2 billion penalties and fines, along with the dismissal of four senior employees, along with more fallout for lower-level employees.

"This will be devastating to the company, given their reliance on US products and software", Douglas Jacobson, an exports control lawyer who represents suppliers to ZTE, said of the ban on supplying the company.

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As U.S. concerns about safeguarding its chip technology and cutting its trade deficit grow, the tech sector has become a flashpoint in the broader battle about trade and economic policy, with U.S. President Donald Trump accusing Chinese firms of intellectual property theft for years. "This egregious behaviour can not be ignored", said Wilbur Ross, the U.S. secretary of commerce.

For ZTE itself, the latest US action means one of the world's top makers of smartphones and communications gear will no longer be able to buy technology from American suppliers, including components central to its products.

The UK's National Cyber Security Centre (NCSC) has warned that one of China's biggest telecoms infrastructure and smartphone firms is a national security risk.

Mr Trump has repeatedly accused Beijing of "manipulating its currency", tweeting: "Russia and China are playing the Currency Devaluation game as the USA keeps raising interest rates".

The action of the ban imposed by the US on the ZTE corp. means that one of the world's top manufacturers of smart phones and communication gear will not be able to buy technology from American Supplies. ZTE has purchased chips from Qualcomm Inc. ZTE already sells both its branded and white-label smartphones via mobile carriers AT&T and Verizon in the US.

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