ZTE Corp, China's biggest publicly traded telecommunications equipment provider, has halted sales of its consumer products and related services after the United States government last month banned the sale of American technology to the company.
Australia's largest telco said that the US Government's denial order, which was issued last month and prohibits US companies from selling device components and software to ZTE, now prevents ZTE from manufacturing devices for Telstra's range.
The government's order, which went into effect immediately, bans American firms from exporting components directly to ZTE or through a third country until March 13, 2025. US officials have said the decision of the BIS to impose the ban against ZTE was not related to trade policy, according to Chinese press reports. As a outcome of such heavy restrictions, the company today announced to Hong Kong stock market traders that it will be shutting down the majority of its operations.
Last month, the Department of Commerce officially instated the ban, alleging that ZTE had violated the terms of the sanction case. With no phones rolling off the production line, ZTE has stopped sales through its website and Alibaba's Tmall marketplace. As the USA and China skirt the possibility of a trade war, the ZTE situation throws a new complication into the mix.
"ZTE made false statements to the U.S. Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation", U.S. Secretary of Commerce Wilbur Ross said in a statement.
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ZTE said in an exchange filing it "maintains sufficient cash" for now and will meet its commercial obligations.
This followed the revelation that ZTE had flouted a USA order by shipping US-made components to Iran and North Korea in 2017.
This order prohibits USA companies, including ZTE's major suppliers such as Qualcomm and Google (for Android), from exporting their products to ZTE for a period of seven years.
"We fully understand high-tech factories' characteristic of fast-paced shipments of goods, we won't create obstacles for the pace of their exports", a trade official told Reuters on Monday.
We'll keep you posted as this situation continues to unfold. The employee, who declined to be named, said business trips had been halted. The company could not compete due to an export ban from the United States.