Trump and Senate fight over the fate of ZTE

Trump and Senate fight over the fate of ZTE

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 company.

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 installations.

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