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ZTE has ceased 'major operating activities' due to US supply ban

The company say it's continuing to communicate with the U.S. in hopes of reversing the order.

Published onMay 9, 2018

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  • ZTE has stopped major operations following a supply ban by the U.S.
  • The company faces a shortage of crucial smartphone components due to the ban.
  • ZTE is continuing to communicate with the U.S. in order to revise or reverse the order.

ZTE has halted “major” core business operations following a U.S. supply ban.

“As a result of the Denial Order, the major operating activities of the company have ceased,” read an exchange filing, spotted by Reuters. So what does that mean? According to Quartz, online retailers in China have stopped selling ZTE handsets. Nikkei (paywall) reports that carrier stores in China are “nearly out of stock” as well.

Hope for a reprieve?

ZTE’s filing noted it still had “sufficient cash” and was sticking to its commercial obligations. The company was continuing to communicate with the U.S. government regarding the ban, in hopes of changing or reversing the order, the filing added.

ZTE could be deprived of key hardware for its smartphones as a result of the supply ban. More specifically, the firm uses Snapdragon mobile processors by U.S. silicon giant Qualcomm.

No HUAWEI or ZTE devices sold on military bases, per Pentagon

The Chinese brand could also lose Android-related licenses due to the ban. Android is free for brands to use, but companies can qualify for a license to use Google Mobile Services. The license means smartphone brands are free to pre-install the Play Store, other popular Google apps, and Google APIs on their devices.

ZTE was slapped with a supply ban by Washington after it violated sanctions against Iran. It’s not the only Chinese manufacturer in the spotlight, as Huawei is also reportedly under investigation for flouting sanctions against Iran.

China has stepped up its already aggressive plans for the domestic semiconductor sector in the wake of the ban. The country is expected to announce a $47 billion investment fund to help wean local tech companies off U.S. silicon.

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