Well, that didn’t take long. Less than a month since ZTE was hit with a ban from the U.S. government, the Shenzhen, China-based telecommunications firm has just confirmed it has ceased "major operating activities."
ZTE issued the announcement to the Hong Kong Stock Exchange today (May 9), attributing the shutdown to the Denial Order issued by U.S. lawmakers in April. For now, the company’s products remain on store shelves around the world, though according to the Nikkei Asian Review by way of Quartz, some carriers in ZTE’s home nation are no longer offering them.
A visit to ZTE’s global site for devices redirects users to the corporate portal, although at the time of writing the U.S. site is still functioning normally, with links to buy phones through carrier partners.
While ZTE has evidently halted production for the time being, the company is actively talking to the U.S. government to “facilitate the modification or reversal” of the ban, according to the statement. ZTE says it is nevertheless financially stable and will continue to uphold its commercial obligations in the meantime.
Today’s news is the latest in a saga dating back to March 2017, when ZTE was discovered to have been illegally exporting products containing U.S.-sourced components to Iran and North Korea. The telecom giant was forced to pay more than $800 million in penalties for that transgression, and was directed to rebuke all personnel responsible as part of its plea deal.
That brings to last month, when a U.S. Department of Commerce investigation found that ZTE retained all of those employees and paid them bonuses. In response, the U.S. government served the company with a ban, forbidding it to use any U.S.-sourced technology in its products for seven years.
ZTE responded by calling the ban unfair, saying it was delivered “before the completion of the investigation of facts.” The company added that the “Denial Order will not only severely impact the survival and development of ZTE, but will also cause damages to all partners of ZTE including a large number of U.S. companies.”
ZTE, which uses Qualcomm processors in many of its phones and exclusively employs Google’s Android operating system and apps, indeed relies on U.S. companies to a significant degree. Sales through U.S. prepaid cellular carriers, such as T-Mobile and Boost Mobile, are also responsible for a major portion of its business. Spokespeople from both networks declined to comment on today's announcement when we reached out. Tom's Guide has also contacted ZTE, and will report back as soon as we hear anything.
Photo Credit: Shaun Lucas/Tom's Guide