The United States government has made a decision to ban the Chinese company ZTE for seven years. ZTE has been restricted from purchasing American-made chips and components.
The decision was decided by the United States Department of Commerce due to violations of an agreement over the sale of products. ZTE had illegally shipped products to companies such as Iran and North Korea.
“These are essential parts that aren’t easily replaced. ” – Joel Ying, a Nomura analyst.
ZTE Corporation is a Chinese based company that was founded back in 1985. ZTE is widely known for cheap and powerful smartphones, tablets and other smart devices.
“At least for the next five to ten years, ZTE can’t exist without American companies.”
In China, ZTE is the second largest smartphone manufacturer (after Huawei). In 2017, ZTE ended up paying an $890 million fine to the United States.
This new seven-year ban will have a strong adverse effect on the company.
“This will be devastating to the company, given their reliance on US products and software. It’s certainly going to make it very difficult for them to produce and will have a potentially significant short and long-term negative impact on the company. This is going to tank their stock.” – Douglas Jacobson an exports control lawyer, manages and represents suppliers to ZTE
Earlier this year mobile carriers such as Verizon were also prevented from carrying Huawei phones. The United States government has been coming down very hard on Chinese companies from entering the market likely to protect our own current national technology companies.
Companies such as Huawei have shown that they can offer a really powerful phone at often times lower price points than phones that are available in the United States. However, with what feels like the country building up a wall to protect our own companies, I wonder what this will do on the international scale.