Date
21 October 2018
ZTE is facing mounting woes as US authorities have banned American firms from supplying components and software to the Chinese telecom equipment and smartphone manufacturer. Photo: Bloomberg
ZTE is facing mounting woes as US authorities have banned American firms from supplying components and software to the Chinese telecom equipment and smartphone manufacturer. Photo: Bloomberg

ZTE delays earnings report after US parts supply ban

Chinese telecom equipment and smartphone maker ZTE Corp on Wednesday postponed the release of quarterly earnings, saying it needs time to assess the impact of a US order that bans American companies from selling it parts, Reuters reports.

Under the original schedule, the Shenzhen-listed company was to release the results on Thursday.

On Monday, the US Commerce Department banned American firms from selling parts and software to ZTE for seven years. The move was sparked by the Chinese firm alleged violation of an agreement that was reached after it was caught illegally shipping US goods to Iran.

ZTE said its board postponed a meeting to approve the results while it reviews the order. Trading in its shares has been suspended in China since Tuesday.

American companies are estimated to provide 25-30 percent of the components used in ZTE’s equipment.

A senior US Commerce official told Reuters that the ban is unlikely to be lifted.

Washington has not included any “off ramp” under the terms of this week’s order, the official said.

The Commerce Department has an appeals process for companies to try to get off the list, but it is unclear whether that would be available to ZTE because the case had been previously subject to a settlement.

Even so, ZTE would have little recourse in the near term because appeals would have to be approved by the Commerce Department’s Bureau of Industry and Security, the same agency that issued the ban, the report noted.

One key area of concern is whether ZTE will be able to continue to sell phones running Google’s widely used Android operating system.

ZTE and Google have been discussing the impact of the ban, a source familiar with those discussions told Reuters on Tuesday. 

The US is ZTE’s top smartphone market, accounting for 46 percent of its shipments, followed by China at 24 percent, according to research firm IDC.

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CG/RC

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