China’s ZTE removed chief compliance officer before USA sanction

Roger Entner, an analyst with Recon Analytics, said he expects us carriers and retailers will sell out current ZTE inventories, then stop selling the Chinese company’s handsets. Not only the company will not be able to use Qualcomm chipsets in its mobile devices, it could lose its Android license as well.

On April 16, 2018, the U.S. Department of Commerce imposed a denial order involving Zhongxing Telecommunications Equipment Corporation of Shenzhen, China (ZTE Corporation) and ZTE Kangxun Telecommunications Ltd of Hi-New Shenzhen, China (ZTE Kangxun).

ZTE will postpone the release of its quarterly earnings report after the United States government banned American companies from selling goods to the Chinese telecom and smartphone maker. The US regulator has also ignored the fact that ZTE devoted a lot of resources, including more than US$50 million in 2017, to learn and comply with US export control laws and regulations, after pleading guilty in 2016 to violating US sanctions, according to the statement.

When introducing the export ban in Washington, a commerce department official told reporters there was no “off ramp” for the company to seek a reversal of the blockade.

Apart from all these, it would be interesting to see if the ZTE ban on procuring the U.S. developed foreign supplies affect its nubia sub-brand.

“Trying so hard, bearing so much, all to fight for China’s interest – how touching!” said one popular comment that played on a comparison with a late Qing dynasty official, Li Hongzhang, a chief negotiator in the first Sino-Japanese war.

Its phones in the United States use chip sets and processors from Qualcomm, according to company specifications on its U.S. website, which showed all its “signature” phones using Qualcomm chip sets such as Snapdragon 820 and Snapdragon 617. A number of other chip suppliers will be affected by the ban. “The action has given way to widespread market concern on the US trade and investment environment”, a spokesman said. That means that firms in the US can not provide the Chinese tech giant with software or components.

“Within ZTE, compliance is regarded as the foundation and bottom-line of the company’s operation”, the statement said.

ZTE’s best hope may be for intervention from Beijing – but that is a long shot given rising tensions between the USA and China.

As a result, the Department of Commerce slapped ZTE with a seven-year export restriction.

China’s chip push is at the heart of the trade stand-off with the United States.

A 2016 report released by a Chinese regime-affiliated think tank-which has resurfaced in recent days due to the news of the USA ban-reveals just how troubling the situation will be for ZTE.