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ZTE, first casualty of US trade war

May 10, 2018.

ZTE Corporation.

Chinese phone manufacturer ZTE Corporation, which was founded in 1985 and employs 75,000 people, has announced it’s shutting down operations, and is likely headed for bankruptcy, unless there’s a drastic turnaround from the Trump Administration. ZTE is the second largest player in the smartphone market in China, after Huawei, and the fourth largest in the US.

Operations at ZTE became impossible following a US government decision banning the export of technology to this manufacturer. ZTE relies heavily on American-made components, especially Qualcomm chips. According to Reuters, software aside, at least 25% of ZTE phone components come from American companies. The export ban also includes Google’s standard suite of Android applications (including Google Maps and Play Store). Last year, ZTE admitted to developing a plan to sell American technology to Iran and North Korea, in violation of American sanction laws. ZTE paid $890 million in penalties, and said it had punished the guilty employees and handled the issue. Last month though, the Trump administration accused ZTE of continuing to lie to the American government, claiming that company management hadn’t punish the guilty employees.

The other major smartphone manufacturer, Huawei, has had a tough time making deals with American phone operators, due to pressure from American regulators worried about national security.

Ars Technica, “The Trump administration just forced smartphone maker ZTE to shut down.”