24 May 2018
| Alan Burkitt-Gray
The fate of ZTE, China’s second biggest telecoms equipment supplier, is being fought out between US President Donald Trump and leading senators on Capitol Hill.
The fate of the company is still unclear, but its factories are essentially at a standstill
and ZTE has already lost an estimated $3 billion.
Trump has promised – through his preferred medium of Twitter
– a reversal of the move by the Department of Commerce
(DoC) to ban US hardware and software companies from supplying
ZTE for seven years. ZTE failed to honour last
year’s agreement to punish those involved in
smuggling kit to Iran, said the DoC.
Congress – both the Senate and the House of
Representatives – is turning out to be more hawkish on
China than Trump. Some US politicians have rebelled: 27
senators have written to Trump to ask him to uphold the ban.
One, Senator Marco Rubio, said: "China is not a developing
country. It is the second largest economy in the world. It will
soon be the largest economy in the world, and yet we continue
to let them cheat and steal."
The Trump administration is believed to be looking at a number
of options, including a fine of $1 billion, on top of the $1
billion or so it paid last year. Some have suggested a complete
management change, even though senior executives whose names
appeared in the original Iran strategy have already left the
China is reported to be looking at boosting its own
semiconductor industry to circumvent ZTE’s need to
use Intel and Qualcomm’s chips.
Huawei, ZTE’s bigger rival, already makes its own
chips. But Huawei is keeping its head down. Capitol Hill and
the DoC already have an eye on it, but so far action has gone
no further than, several years ago, blocking large US telcos
from using its kit in its US networks – though the ban
doesn’t extend to Mexico, for example. And the
Pentagon has banned Huawei and ZTE handsets from military