According to sources, a ZTE representative said on a conference call with major suppliers on Wednesday that Sino-U.S. trade disputes may be a reason why the United States banned the company from selling components to ZTE last week.
The U.S. Department of Commerce last week banned the country’s enterprises from selling parts to Chinese telecommunications equipment manufacturer ZTE within seven years because it violated an agreement reached with the U.S. government after it was found to be illegally selling goods to Iran.
According to sources, the ZTE Corporation representative stated at the meeting that it was naive to think that the United States ordered the ZTE sales to be a matter of “deliberation.” It is speculated that it may be related to the Sino-US trade war.
The United States threatened to impose tariffs on goods worth 150 billion U.S. dollars imported from China. China warned that if it is implemented, it will retaliate. The United States has also taken measures to reduce the access of ZTE and Huawei Technologies to the U.S. market. Allegedly may use their technology to monitor Americans.
According to a statement provided by a spokesperson, US Commerce Secretary Wilbur Ross responded to Reuters' request for comment on Wednesday evening that the ban was 'enforcement issues unrelated to overall trade policy'.
The source said that the conference call was held between ZTE and more than 12 member companies of the Semiconductor Industry Association (SIA).
'The meeting was to inform the latest facts, the circumstances involved, the actions they took after the ban was announced and the remedial measures that were under way,' said a spokesperson for the SIA. 'There was no discussion to help ZTE lodge a claim with the U.S. government.'
Among the products of smart phones and telecommunications network equipment produced by ZTE, American companies supply an estimated 25%-30% of their spare parts.
Qualcomm, one of ZTE's main suppliers, said on Wednesday that the loss of ZTE's business will hurt the company's third quarter profit. According to the technology consulting firm Canalys estimates, ZTE has 65% of mobile phones equipped with Qualcomm chips.
It is not yet clear whether Qualcomm’s representatives participated in the teleconference of ZTE and the company did not comment. ZTE’s spokesperson did not immediately respond to the request for comment.
In addition to Qualcomm, ZTE’s other major business partners include Alphabet, Google, Texas Instruments, and GlobalFoundries.
** Letter to Business Partners**
ZTE also sent a letter to its business partners on Wednesday explaining why it believes that the seven-year ban is an 'excessive move' and that it is disproportionate to the company’s misconduct.
According to a copy of the letter Reuters saw, ZTE said that the ban should be 'very relevant to everyone' because it did not come into force with a warning to the industry and did not wait for it to be announced later this month. The results of the internal independent investigation did not acknowledge the company's progress in export compliance programs.
The letter stated that ZTE invested more than $5,000 in 2017 to improve its compliance program and plans to increase this expenditure this year.
ZTE acknowledged in March that although it had dismissed four senior employees, it did not punish another 35 employees as it had said before, or cut their bonuses, prompting the US Department of Commerce to issue a ban.
ZTE stated in the letter that the company confirmed that the relevant employee’s bonus has not been reduced and that due punishment has not been implemented, it immediately disclosed relevant information and immediately adopted the 'remedial action'.
ZTE said that the ban 'passed the wrong message' to other companies that might consider reconciliation with the U.S. Department of Commerce on export control issues.
ZTE stated that it is committed to complying with the ban and U.S. export control regulations, 'at the same time seeking to find a solution to this problem on all possible levels with the support of many business partners'