14 May 2018
| Alan Burkitt-Gray
President Donald Trump appears to have stepped in to the trade war between Chinese telecoms vendor ZTE and the US Department of Commerce – on the side of ZTE.
In an unexpected development, Trump tweeted on Sunday that
he was working with China’s president Xi Jinping
to save the company, four weeks after the Department of
Commerce (DoC) banned ZTE from using US-made hardware and
software for seven years.
ZTE has still not responded to Trump’s statement,
but Reuters reported on Monday that employees of the
Shenzhen-based company were cheering.
The DoC imposed the seven-year ban in April
after it said ZTE had broken last year’s agreement
to reprimand those executives who had been complicit in
smuggling US hardware and software – as part of ZTE
telecoms kit – to Iran in violation of an
Last Wednesday ZTE said that it had "shut down major
operating activities" as a result of the ban, threatening
the future of 80,000 employees.
Trump tweeted: "President Xi of China, and
I, are working together to give massive Chinese phone company,
ZTE, a way to get back into business, fast. Too many jobs in
China lost. Commerce Department has been instructed to get it
He followed that up four hours later by tweeting: "China and the United States
are working well together on trade, but past negotiations have
been so one sided in favor of China, for so many years, that it
is hard for them to make a deal that benefits both countries.
But be cool, it will all work out!"
Though ZTE and its Chinese rival, Huawei, are banned from
selling equipment to major US carriers, both have customers
among smaller regional operators. And ZTE customers outside the
US include Bell Canada, BT, Forthnet, Orange, Rogers, SoftBank,
Telefónica, Telekom Austria, Telus and True.
Huawei’s customers include AT&T Mexico.
In addition Qualcomm and other US makers of hardware and
software will lose trade if they cannot supply ZTE –
which is fourth in terms of market share for telecoms network
equipment and is a growing supplier of handsets.
Meanwhile Apple and other US companies rely heavily on Chinese
factories for production of smartphones, tablets and other
Trump’s announcements came as trade negotiations
were due to begin between the US and China, at which many of
these issues will be examined.
China responded to April’s ban and
ZTE’s announcement last week by indicating that
the country would step up its investment in semiconductor
technology, so that it would eventually no longer be reliant on
US companies such as Qualcomm and Intel.
Others have pointed out that if ZTE closed down that would
release thousands of Chinese engineers on to the market to
start up rival technology companies.
With Trump’s tweets, he appears to be recognising
the disruption an outright ban on ZTE would cause to the
worldwide technology industry.
However, he may face opposition from Congress. Adam Schiff, the
top Democrat on the House of Representatives’
intelligence committee, warned: "Our intelligence agencies have
warned that ZTE technology and phones pose a major cyber
security threat. You should care more about our national
security than Chinese jobs."
Department of Commerce