Chinese firm ZTE – suppliers must apply for U.S. export license

Photo of author

By Larry Banks

Chinese telecoms hardware maker ZTE said on Wednesday that suppliers must obtain a license to provide materials, in line with restrictions on the company recently imposed by the US government.

According to Reuters, the news comes just one day after the US Commerce Department imposed export restrictions on ZTE for allegedly violating sanctions on Iran, in a move that could disrupt its global supply chain.

The US Bureau of Industry and Security of the Department of Commerce said that ZTE, ZTE Kangxun Telecommunications, ZTE Parsian and Beijing 8-Star International were added to the list of companies, ZTE stated to the Hong Kong stock exchange.

Any US-based suppliers to the companies mentioned must now apply for a license to supply components, effective immediately, although suppliers located in other countries are not affected.

“The company is conducting a thorough assessment on the potential impacts of the restriction measures on the business and operation of the group”, said chairman Hou Weigui in a statement.

“As at the date of this announcement, the company has been, and will continue to be, cooperative in the investigations by the U.S. relevant governmental department, and has been actively facilitating communications with the U.S. governmental department to search for a solution”.

ZTE has also said that there is no certainty a solution could be reached but provided no further details. Meanwhile, shares in the company, which is listed in Hong Kong, have been suspended since Monday. The firm has a market value of $1.4 billion.

The Chinese government has said it is resolutely opposed to the tough new measures, and ZTE is one of the largest companies the Commerce Department has hit with an almost total ban.

The firm is currently number 4 amongst smartphone companies in the US with a 7 percent share behind Apple, Samsung and LG, according to research firm IDC. It sells devices to three of the four largest mobile operators in the US, including AT&T, T-Mobile and Sprint.

SOURCE: Reuters.

Images Courtesy of DepositPhotos