U.S. Sanctions against China's ZTE, Followed by Qualcomm, Faced with 3 Threats

ZTE Corporation was banned by the United States for violating U.S. sanctions against Iran. U.S. Secretary of Commerce Secretary Wilbur Ross announced on April 16 that US companies will not be allowed to sell for the next seven years (until March 13, 2025). The component was given to ZTE. However, the U.S. ban on ZTE’s fear of letting its chip maker Qualcomm suffer?

Reuters reported on the 18th that the U.S.-sanctioned ban imposed on ZTE has caused an impact on its own Qualcomm. As a result, there are three threats faced by Qualcomm: (1) losing important customers (ZTE); (2) letting Qualcomm Competitors gain; (3) China fears to resort to retaliatory measures.

According to the report, Qualcomm’s products account for a high market share in the semiconductors used in ZTE’s smartphones, according to Neil Shah, Head of Research at Counterpoint Research. Qualcomm’s market share is about half. Neil Shah stated that ZTE’s global smartphones. The annual sales volume is about 45 million pieces, which is equivalent to nearly $500 million in revenue if it is calculated on the average asking price of 25 US dollars for the chipsets it carries.

In addition, the Chinese government is planning to increase the market share of Huawei's semiconductor technology for semiconductor production. As a countermeasure to US-China trade friction, Qualcomm may become the target of Chinese attacks.

Kanalys pointed out that in recent years, ZTE’s smart phone sales have fallen out of the top 10 in China, but in the U.S. market, ZTE ranked fourth behind Apple, Samsung, and LG. Dachang, the market share in 2017 reached 11.2%. According to information published on the official website by ZTE, the smartphones sold in the United States used Qualcomm's chipsets and processors.