On April 16, local time, US Department of Commerce officials disclosed that US companies were banned from selling goods to ZTE within the next 7 years.
The reporter noted that on the morning of April 17th, ZTE announced the temporary suspension of the trading of A-shares and H-shares. At the same time, the company’s share prices in the China-US industry chain were also affected. Some experts also He pointed out that because ZTE has close cooperation with many U.S. companies, the U.S. government’s export control measures for ZTE will cause losses to Qualcomm, Intel and other ZTE suppliers in the United States.
U.S. Takes Restrictive Measures on ZTE
On April 16, local time, US Department of Commerce officials disclosed that because of violations of U.S. sanctions, U.S. companies were banned from selling components, merchandise, software, and technology to Chinese telecommunications equipment manufacturer ZTE for the next seven years until March 2025. On the 13th, the National Cyber Security Center (NCSC) also issued new suggestions to warn the telecommunications industry not to use ZTE's equipment and services.
According to a report in the Financial Times, NCSC technical director Ian Levy said in a letter sent to network operators: 'Using ZTE's equipment and services in existing telecommunication infrastructure will have a This poses no effective and practical mitigation. 'The NCSC also added in its brief statement released on its official website that the agency's 'responsibility to emphasize the potential risks faced by UK national security and provide advice based on our technical capabilities'.
Afterwards, ZTE Corporation issued a statement in the official website that ZTE has been informed of the US Department of Commerce’s refusal to activate the company. The company is fully assessing the possible impact of the incident on the company and actively communicates and responds to all aspects.
The incident can be traced back to 2012 at the earliest, when the U.S. Department of Commerce and the Federal Bureau of Investigation conducted investigations on ZTE’s unauthorized export to Iran and violated the U.S. trade sanctions against Iran. It was found that ZTE had signed 120 million U.S. telecommunications companies with Iran. The US dollar contract. The incident broke out completely in 2016 when the U.S. Department of Commerce accused ZTE of allegedly violating U.S. export control policies against Iran and imposing an embargo on ZTE, and ZTE was then included on the 'special review list' by the U.S. side.
In March 2017, ZTE pleaded guilty in the United States federal court in Texas. According to ZTE’s previous settlement agreement with the US Treasury, the Ministry of Commerce and the Ministry of Justice, ZTE paid US$890 million in fines and fines. An additional 300 million U.S. dollars in fines were imposed. The U.S. Department of Commerce’s Bureau of Industry and Security’s 300 million U.S. dollar fine for ZTE could be suspended for payment, depending on the supervision and audit results of ZTE’s implementation of the agreement in the next seven years.
It is worth noting that this is the largest export control case in the United States Department of Justice for export control or sanctions.
Surprisingly, more than a year later, the U.S. Department of Commerce again hit hard. On April 16, local time, the U.S. Department of Commerce identified ZTE as making many false statements. US Department of Commerce officials stated that according to the agreement at that time, ZTE Corporation Promising to dismiss 4 senior employees and penalize 35 employees by reducing bonuses or penalties, but the U.S. Secretary of Commerce stated in a statement that 'ZTE did not expel senior employees, but rewarded them'. ZTE did this year In March, the company said that the company only dismissed four senior employees and did not penalize or reduce the bonus of 35 employees.
On the surface, ZTE’s ban on sales in the United States is just a case, but outsiders believe that this is a microcosm of trade friction between China and the US. In fact, with the escalating trade frictions between China and the United States, China has already taken countermeasures. It is proposed to impose a tariff of 25% on 14 categories of 106 items such as soybeans, automobiles, and chemicals in the United States; and the 10 major industries that will issue sanctions on China’s exports recently include the new generation of information technology industry and high-end CNC machine tools. And robots, aerospace equipment, marine engineering equipment and high-tech ships, advanced rail transit equipment, energy-saving and new energy vehicles, etc.
It is worth noting that the information and communication industry in which ZTE is located is precisely the industry that bears the brunt of sanctions against China’s exports. In response, on the morning of April 17, a spokesperson for the Ministry of Commerce stated that the Ministry of Commerce will pay close attention to the progress of the situation. Always ready to take necessary measures to safeguard the legitimate rights and interests of Chinese companies.
Related industry chain companies have been affected
ZTE, as one of the world's leading integrated communication solution providers, is subject to U.S. Department of Commerce’s export restrictions, which will affect China-US related industry chain companies.
In the report, CICC stated that ZTE currently accounts for approximately 10% of the global telecommunications equipment market and approximately 30% of the market share of China's telecommunications equipment market. ZTE has 1 to 2 months of inventory of spare parts, if it is not possible to reach a settlement as soon as possible, It will affect the normal production and sales of communications equipment and mobile phones. At the same time, it will have a certain impact on the current global and Chinese operators' network construction, and may affect the future promotion of 5G networks.
The CITIC Securities Communications Group stated that the event has a significant short-term impact. 'Since ZTE's baseband chips, radio frequency chips, storage, and most of the optical components are all from the United States, the short-term impact is significant. The delivery of existing orders has resulted in new acquisitions of orders. Will be greatly affected, it is expected that delivery, payment will be affected; upstream substitutability is weak. The long-term impact of ZTE needs to see the results of the negotiations between the two countries on the subsequent mediation, as well as domestic self-controlled alternative development process. '
In fact, it is not just Chinese companies that have been affected. As far as the United States is concerned, there are many US companies currently cooperating with ZTE, including well-known companies such as Microsoft, Intel and IBM.
The reporter noticed that at the Barcelona Mobile World Congress held in February this year, ZTE announced cooperation with Intel and officially released the next-generation IT baseband products (IT BBU) for 5G, and collaborated with Qualcomm and others to develop 5G NR-based specifications. Interoperability testing and OTA field testing.
In this regard, the experts pointed out that because ZTE has closely cooperated with many U.S. companies, the U.S. government’s export control measures for ZTE will cause losses to Qualcomm, Intel and other ZTE suppliers in the United States.
In addition, as of the close of the US time on the 16th, ACIA's 30% purchase of its own shipments fell 35.97%, Oclaro fell 15.18%, Lumentum fell 9.06%, fabrinet fell 9.81%. Affected by this news, A shares on the 17th A number of technology companies have seen their stock prices decline.