ZTE says main business operations cease due to U.S. ban

ZTE said its main business operations have ceased due to a 7-year supply ban imposed by the U.S. government, Reuters reported.

Last month, Washington blocked U.S. firms from supplying components and technology to ZTE after it was found to have violated U.S. export restrictions. Analysts say that tech firms such as Intel, Qualcomm, Google, among others, would also be impacted by the ban of ZTE, China’s second biggest telecom equipment maker.
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“As a result of the Denial Order, the major operating activities of the company have ceased,” ZTE said in the filing. “As of now, the company maintains sufficient cash and strictly adheres to its commercial obligations subject to compliance with laws and regulations.”

Earlier, Taiwan-based chipset company MediaTek said it received an approval from the local government to supply chips to ZTE.

ZTE said it was actively communicating with the U.S. government in order to facilitate the modification or reversal of the Denial Order by the U.S. government and forge a positive outcome in the development of matters.

The ban that threatens to cut off ZTE’s supply chain came amid heightened tension over a possible U.S.-China trade war. The Chinese government raised the issue of ZTE last week with a visiting U.S. trade delegation.

ZTE said on Sunday it had submitted a request to the U.S. Commerce Department for the suspension of the ban.

ZTE appears to have suspended its online stores on its own website as well as on Alibaba Group’s e-commerce platform Taobao over the past few days, which display a “page being updated” message with no products to order.

ZTE settled the sanction case with the U.S. government last March after admitting to illegally shipping products with U.S. technology to countries including Iran and paying a record fine of nearly $900 million.

Last month, the U.S. government reactivated the ban after it said ZTE violated terms of the settlement and made repeated false statements, which ZTE disputed.

Huawei, the largest telecom equipment maker, is also facing some investigation by the U.S. administration.