A major Chinese smart phone and telecoms infrastructure manufacturer was stopped cold by U.S. trade sanctions, after it 1. did business with Iran contrary to U.S. rules and 2. didn’t adequately punish the executives responsible for the violation. ZTE announced last week that “the major operating activities of the company have ceased”. It’s number two smart phone maker in China, behind Huawei, but has a low profile among U.S. consumers.
The U.S. commerce department issued an order that bans U.S. companies from doing business with ZTE. Since technology developed in the U.S. – much of it here in California – is critical to high technology products, ZTE had no choice but to shut down. It might be temporary, though, according to an article by Roger Cheng on CNET…
The company had to shut down its operations to comply with the order, but it continues to talk with US government officials about a potential stay or reconsideration of the denial order, according to a person familiar with the situation.
“Ceasing operations does not mean we’re going away,” the person said, noting that ZTE has a cash reserve and could eventually tap into financing to stay alive.
The company is also pegging its hopes on broader discussions between US and Chinese officials in their bilateral trade talks – ZTE is expected to be a topic of conversation brought up on the Chinese side, the person said.
One critical piece of technology that ZTE can’t have is Google’s Android operating system, or at least the bells and whistles that go along with it. Android’s core is open source, but linked elements, like the Google Play store and many of the apps in it, are proprietary and now off limits.
ZTE won’t just roll over die. The commerce department’s order might even serve to weaken the Apple/Google mobile operating system duopoly. Of the two ZTE smart phones I’ve owned, one was based on the Firefox mobile OS. It didn’t go anywhere in the market and was eventually shelved, but it shows that ZTE knows its options.