09 May 2018
| Alan Burkitt-Gray
ZTE says it has shut down operations because of the action taken against it last month by the US.
Customers that are likely to be immediately affected by the
ruling include all three large Canadian operators, Bell Canada,
Rogers and Telus, as well as Orange, Telefónica,
SoftBank, True, Telekom Austria and Forthnet.
ZTE is a significant contributor to the development of 5G
standards and if it does disappear that may disrupt the rollout
of the new mobile standard over the next few years while other
companies argue over the intellectual property involved.
ZTE’s plight follows a statement by the US Department of Commerce
(DoC) in April that the vendor had not taken the action it
promised to take against those executives implicated in
smuggling equipment to Iran. ZTE agreed in 2017, in a
settlement of an action by the DoC in 2016, to reprimand them
and deprive them of their bonuses.
In punishment the DoC issued a denial order that outlaws US
companies such as Cisco, Dell, Intel, Microsoft, Oracle,
Qualcomm and Symantec to trade with ZTE for seven years. The
decision will also affect ZTE’s growing handset
business: its terminals use Qualcomm chips.
This morning ZTE issued a statement to the Hong Kong stock
exchange, where its shares are quoted: "As a result of the
denial order, the major operating activities of the company
It said it was
still trying to negotiate a settlement with the US. "The
company and related parties are actively communicating with the
relevant US government departments in order to facilitate the
modification or reversal of the denial order by the US
government and forge a positive outcome in the development of
ZTE did not elaborate on the decision, which will have an
impact on operators around the world that use its equipment
– including smaller cable and telecoms companies in
the US, where the previous ban applied only to the larger
Yesterday ZTE said it had delayed its annual shareholders
meeting. It was due to happen this Friday but ZTE said it now
expects to hold the meeting before 30 June.
In April ZTE protested that it had established a compliance
committee in response to the US action – though it
said that committee is "led directly by its CEO", and has built
a global team of experienced export control compliance experts,
hired professional guidance, and organised compliance training
covering over 65,000 employees.
ZTE also said in April that "the company’s board
of directors and management team will do their utmost to
protect the interest of 80,000 employees to work legally, as
well as the interest of their families".
Department of Commerce,