US bans ZTE for seven consecutive years; decision may backfire

ZTE Ban

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The US government has banned ZTE for seven years. The company has been restricted to buy American-made chips and components. This decision has been taken by The U.S. Commerce Department due to the violation of agreement over the sale of products which were being illegally shipped to Iran and North Korea.

“These are essential parts that aren’t easily replaced. ” – Joel Ying, a Nomura analyst.

ZTE Corporation is Chinese multinational equipment and systems company which was founded way back in 1985. The company is widely known for their smartphones, tablet computers, hardware software service and telecommunication software amongst other things.

“At least for the next five to ten years, ZTE can’t exist without American companies.”

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Within China, ZTE is considered as the second largest smartphone manufacturer and stands after the legendary brand Huawei. Last year ZTE ended up paying $890 million to the U.S. government for the same issue and now the seven-year-long ban will definitely have an 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.

The American administration already has blocked wireless providers from carrying Huawei phones and as per the experts, this is due to the fear over the engrossing tech of China. ZTE has been playing a crucial role in putting up a fast, wireless 5G service which may create a tough time for all the American expertise.

Via: Bloomberg

US bans ZTE for seven consecutive years; decision may backfire