ZTE Business Operations Grind to a Halt Due to US Export Banby Ryan Smith on May 9, 2018 1:10 PM EST
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After getting cut-off from American technology suppliers last month, many of us have been wondering what ZTE would do without access to so many of its critical suppliers. Now we have an answer: the company has ground to a halt.
In a brief filing submitted today on the Hong Kong Exchange, ZTE has notified investors that “As a result of the Denial Order, the major operating activities of the company have ceased.” Without access to its American suppliers, there is little production the company can do at the moment, as they no longer have access to the parts or services necessary to maintain their current operations.
As things stand now, the most immediate relief for ZTE would be to get the seven-year US ban modified or lifted entirely, which according to the company’s filing, they’re in the process of petitioning the US government to do just that. However given the nature of ZTE’s violations – shipping US technology to Iran and North Korea, and then lying about employee reprimands – it will be a significant battle to get the export ban meaningfully altered. Otherwise, in the longer term, ZTE would need to find ways to restructure its business entirely around non-US suppliers such as MediaTek.
In the meantime the company is still solvent according to their filing, as ZTE “maintains sufficient cash and strictly adheres to its commercial obligations subject to compliance with laws and regulations.” So while the US export ban is a massive setback for the company, it’s not outright fatal, at least so long as the company is able to resolve their problems quickly.
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HardwareDufus - Wednesday, May 9, 2018 - linkUnfortunately, I wasn't aware of the Huawei networking side and it's sins....
I just converted to Android... dumping my 4 Microsoft phones, 2 Lumia950XLs, 1 1520, 1 920 and purchasing 3 Huawei Mate 10 Lites DualSim for use in Mexico and the USA (got a good price on them for what they are)... I sense I won't see Oreo (Android8) updates for these 4 week old phones now... LOL. Oh well. Guess I just should have bought Samsung like everyone else.
Samus - Wednesday, May 9, 2018 - linkHuawei isn't alone in all this. Cisco 2501 routers as far back as the late 90's had an IOS (internet operating system, the OS Cisco routers run) backdoor, commonly thought to have been used by the Federal Government and it's allies through the Bush Administration. Cisco naturally denied this and claimed it was a diagnostics port for lockouts and resets, and only they had access to it and it was only used locally for customer returns, etc.
We all know that was BS. When a router is locked out, you short two JTAG pins, it boots in recovery mode, and you are given the option to factory reset. There should never be a way to maintain a router configuration through an admin reset.
And this is why Cisco is no longer the dominant force in data centers and ISP backends.
DanNeely - Wednesday, May 9, 2018 - linkDunno what the situation with Huawei is, but unless they're stupid enough to say they're going to punish a bunch of people and then give most of them their regularly scheduled bonuses, they're only going to end up with a 'well this sucks' level fine like ZTE was initially hit with. It was only blatantly lying to US regulators about complying with the settlement that got ZTE a quasi-death sentence.
With ZTE's debacle as a warning, I'm reasonably confident that if Huawei says they're going to punish people who broke US sanctions to make the US govt happy, that those people actually will get sacked.
phoenix_rizzen - Wednesday, May 9, 2018 - linkThese kinds of sanctions wouldn't hurt Huawei nearly as much as it did ZTE.
Huawei makes their own SoC and LTE modems. Screens come from Samsung/LG/etc from outside the US. Same for batteries and all the other bits and bobs. They use the occasional Qualcomm SoC or modem in the lower-end models, which they don't really have a replacement for (although I guess they could re-purpose the Kirin 950 as their "low-end" SoC).
ZTE (at least for phones) was more of an integrator than a designer of their own parts. Which is why the sanctions have hurt them so badly, so quickly.
mczak - Thursday, May 10, 2018 - linkKirin 65x series is already quite low-end (though quite old I might add since all 4 in the series are nearly 100% identical and the 650 is 2 years old, but it was quite modern for its class when it was new).
name99 - Thursday, May 10, 2018 - linkRight... That will be the ONLY consequence...
No possibility that China might be somewhat pissed off by this, and ready to pick up the pieces and lead the world after the US shoots its wad and destroys the few remaining friendships it has by attacking Iran?
Lord of the Bored - Friday, May 11, 2018 - linkMan, who would even get mad at us if we attacked Iran? Russia, sure, but Russia gets mad at us no matter what we do. I'm pretty sure half of Russia's foreign policy is actually "adopt the opposite stance of whatever America said".
Everyone else will just go "tsk, tsk, there go those americans again" and continue on like nothing happened.
Lord of the Bored - Friday, May 11, 2018 - linkAddendum to note I'm not saying that attacking Iran is a good idea, just that the actual political repercussions would be fairly mild.
webdoctors - Wednesday, May 9, 2018 - linkAside from QCOM chips, what's the other technology that's hurting them? Google's android ?
Mediatek or some other SoC company could replace the QCOM options (aside from the terrible modem/power perf) and life would go on...what company isn't setup to have alternative suppliers in case things go south?
Taiwan also has a bunch of HW suppliers that should be able to supply the parts.
evefavretto - Wednesday, May 9, 2018 - linkChips for their networking gear. FPGAs and other stuff. Those are way harder to replace, simply because most of the suppliers are US based.