ZTE has mostly shut down its main business operations, according to Reuters, after the US government banned US companies from supplying it with components. ZTE did say that it is trying to get a modification or reversal to the ban, though.
Because ZTE makes a lot of the products using components from Qualcomm and Intel, a ban on US companies supplying them is a huge hit. We knew it would be when the US government announced the ban, but man, this is all happening very quickly.
ZTE can always try to find other suppliers for its components. The problem is, there aren’t many alternatives. Mediatek is a mobile chipset maker that could step in to provide some relief.
Remember, as you possibly feel bad for ZTE in all of this – the reason they got this US supply ban was because they lied about paying bonuses to workers. They were initially in trouble with the US for supplying electronics to Iran, but after being slapped with heavy fines for that, they failed to follow through on additional rules set by the US government. ZTE was supposed to fire certain employees involved in that Iran deal and also vacate bonuses to a bunch of other employees. When the US government found out that they lied about the bonuses and paid them anyway, that’s when this latest, crippling ban happened.
We’ll keep you updated on ZTE, but things sure do look bad at the moment.
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