On behalf of ZTE's export control specialists, Douglas Jacobson of the Jacobson Burton Kelley PLLC Law Firm in the United States on the 18th accepted an interview with Xinhua News that the U.S. Department of Commerce’s latest sanctions against ZTE It will certainly affect ZTE’s global sales. It is also difficult for ZTE to reverse this decision of the U.S. Department of Commerce.
ZTE negotiates Android usage rights with Google
The U.S. Department of Commerce sanctioned ZTE’s news that shocked the global telecommunications industry and caused a huge impact on ZTE and related companies. Reuters reported that ZTE may purchase 25% to 30% of components and hardware from U.S. companies and any one of the supply chain The interruption will affect ZTE's ability to produce products in China.
Reuters reported on the 17th that after the US banned domestic companies from selling components to ZTE, ZTE’s mobile devices may no longer be able to use Google’s Android operating system. Losing access to Android will be a huge blow to ZTE. ZTE does not have its own operating system and will face a dilemma with few alternatives.
The report quoted sources as saying that ZTE and Google’s parent company’s Alphabet division discussed the impact of the US government ban all night, but until the morning of the 17th local time, the two companies still did not make a decision on whether ZTE could use the Android system.
The Android operating system developed by Google is the core of ZTE's smart phones, providing various user-oriented functions, applications, and other services. This means that the software may also be included in the US government's ban on Monday.
ZTE annually sells about 45 million smartphones globally, nearly half of which use Qualcomm chips. In the US, ZTE is the fourth-largest supplier of smartphones, ranking behind Apple, Samsung Electronics, and LG Electronics. According to the data from Canalis, a consulting firm, Last year, ZTE’s market share in the United States was 11.2%.
The United States stressed that blocking was caused by ZTE's 'Foul'
The U.S. Department of Commerce emphasized that the latest announced penalty was the continuation of the U.S. Department of Commerce’s sanctions clause on ZTE’s violation of US restrictions on the sale of U.S. technology to Iran two years ago.
On March 8, 2016, the U.S. Department of Commerce accused ZTE of allegedly violating U.S. export control policies against Iran and imposing an embargo on ZTE. ZTE was then included on the 'Special Review List' by the U.S. side. After many games and negotiations, 2017 In March, ZTE Corporation sanctioned a penalty. According to the agreement signed by the two parties at the time, ZTE Corporation must pay the U.S. government a total of 1.192 billion U.S. dollars in fines, of which 300 million U.S. dollars were suspended. In addition to fines, ZTE also conducted internal control reforms and fired the company’s CEO. A number of company executives within the company.
On the 16th when the US Commerce Secretary Ross announced the new sanctions, ZTE violated some of the terms of the aforementioned settlement agreement: ZTE had stated in two letters to the U.S. government in November 2016 and July 2017. The company sanctioned 39 employees who had previously been found guilty of irregularities. However, when the Department of Industry and Security of the US Department of Commerce requested it to provide a specific report in February 2018, it failed to produce evidence. Subsequently ZTE admitted that it did not follow the letter. , Reducing bonuses or punishing employees.
'ZTE is hard to reverse this decision of the US Department of Commerce. Before that, they were granted 'probation' when they were sanctioned in March 2016. According to the agreement at the time, they should take some measures for some employees. ' Jacobson's澎湃 News shows.
Before the press release, ZTE has not responded to the enquiry about the above issues.
On the 17th, ZTE, which had listed on the A-shares and H-shares, also issued a suspension announcement. Affected by this news, the share price of ZTE’s major suppliers in the United States also fell sharply.
In a statement issued on the morning of the 17th, ZTE stated that the company is fully evaluating the possible impact of the incident on the company and actively communicating with and responding to various aspects. Zeng Yinmin, chairman of ZTE, wrote in an internal letter sent yesterday. Road: 'In such a difficult time, I hope everyone will strengthen their confidence. The team has been working hard to overcome the difficulties. The company is also actively communicating and making the best efforts to promote the resolution of the crisis.'