ZTE Gets Lifeline from Trump, Xi
U.S. President Donald Trump has said that he and Chinese President Xi Jinping are working to give Chinese telecom company ZTE Corp “a way to get back into business, fast.”
“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 done!” Trump wrote on Twitter.
The Chinese technology company earlier this month suspended its main operations after the U.S. Commerce Department banned American supplies to its business.
The ban is the result of ZTE’s failure to comply with an agreement with the U.S. government after it pleaded guilty last year to conspiring to violate U.S. sanctions by illegally shipping U.S. goods and technology to Iran, the Commerce Department said.
As one of the world’s largest telecom equipment makers, ZTE relied on U.S. companies such as Qualcomm Inc and Intel Corp for components.
American companies are estimated to provide 25 percent to 30 percent of the components used in ZTE’s equipment, which includes smartphones and gear to build telecommunications networks.
Recall that the Chinese firm ZTE said on Wednesday it had ceased “major operating activities” after the Trump administration banned the company last month from using components made in the United States. With manufacturing halted at the ZTE plant in Shenzhen, factory workers have been getting called in for training sessions every other day or so — a snooze, they say. The rest of the time, they loaf around in nearby dorms.
Trading in the company’s shares has been suspended for weeks. Staff members have been instructed, in new guidelines reviewed by The New York Times, to reassure anxious clients, while being sure to avoid discussing with them the American technology from which the firm is cut off for the next seven years.
One of China’s most internationally successful technology suppliers, with about $17 billion in annual revenue, ZTE is facing a death sentence. The Commerce Department has blocked its access to American-made components until 2025, saying the company failed to punish employees who violated trade controls against Iran and North Korea.
American microchips power ZTE’s wireless stations. American optical components go into its optical fiber networks. Google’s Android operating system runs its smartphones. As the Trump administration threatens a trade war to stymie China’s plans for promoting advanced industries, the firm’s travails are proving an apt demonstration, for China’s leaders, of exactly why the country needs to be more self-sufficient in technology.
President Xi Jinping recently issued a rousing call to action, according to the state news agency Xinhua.