ZTE’s woes continue, with the company confirming in a filing to the Chinese Stock Exchange today that major operating activities have ceased following the imposition of a trade embargo by the US Government. ZTE was hit with a ban last month by the US government which forbids US-based companies from supplying technology to ZTE, after it was deemed to have violated U.S. export restrictions by illegally shipping goods to Iran.
As a result of the Denial Order, the major operating activities of the company have ceased. […] As of now, the company maintains sufficient cash and strictly adheres to its commercial obligations subject in compliance with laws and regulations.
ZTE is one of world’s largest telecom equipment makers alongside Huawei, Ericsson and Nokia. The company relies on US component manufacturers such as Qualcomm and Intel for at least a third of the components the company uses in its products.
Analysts have also stated that it would be difficult for ZTE to stay competitive, even if it could find non-US alternatives to its key components. In a glimmer of hope, Taiwanese firm Mediatek has obtained a permit from the Taiwanese government to continue to supply the company with its components.
ZTE has said in the exchange filings that it was actively communicating with the US government “in order to facilitate the modification or reversal of the Denial Order … and forge a positive outcome in the development of matters.”
The ban, which effectively cuts off much of ZTE’s supply chain, came amid heightened tension over a possible US-China trade war. The Chinese government raised the issue of ZTE last week with a visiting US Trade Delegation. It said that it had submitted a request to the US 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’s eCommerce platform Taobao over the past few days, which display a “page being updated” message with no products available to order.
News of this development comes as little surprise, as we noticed late last week that the company’s Australian mobile devices website – ztemobiles.com.au – began to redirect to the company’s Chinese international website, with links to its product page redirecting back to the same homepage.
Overnight, Telstra (a large ZTE telco partner) began removing most of re-badged ZTE devices, with only 2 phones showing this morning. However as at 11am, these had been removed too, with the following message being displayed on the prepaid site:
Selected Telstra-branded mobile devices currently unavailable: Due to issues outside of our control, certain Telstra-branded mobile phones and mobile broadband devices made by ZTE are currently unavailable.
We apologise for any inconvenience. For more details on devices currently unavailable, visit here: http://tel.st/ZTECrowd
From what we can tell in the crowd support link above that current users of Telstra/ZTE devices can continue to use these devices and that safety has not been compromised nor will it be. Regarding software and security updates, Telstra advised the following:
We take the security of our customers’ devices very seriously and are in regular contact with operating systems providers to understand any emerging security issues. There are no security vulnerabilities we are aware of affecting software running on these devices and you can rest assured that we will contact you if this changes to provide you with options.
Boost Mobile Australia, which sold the Boost Zume 5 (a re-badged ZTE smartphone), has also pulled the product page for that device from the company’s website. We’ve approached Boost for comment on this development but at the time of writing, we’ve not heard back.
Ausdroid has also attempted to contact major retailers such as JB Hi-Fi, Officeworks, Woolworths, Coles, Kmart and Target, who all currently sell either ZTE devices outright or as re-badged Telstra pre-paid devices.
Last but not least, we have approached ZTE in Australia for comment, but – understandably – they’re not in a position to make any public comment at this stage. A ZTE employee has been quoted by Reuters as saying that staff have been reporting to work as normal but “with not much to do”. The employee, who declined to be named, said business trips had been halted.