China's ZTE says US sanctions have crippled operations
China’s ZTE says US sanctions have crippled operations Shanghai, May 10, 2018 (AFP) - Chinese telecom giant ZTE said its major operations had “ceased” following last month’s US ban on American sales of critical technology to the company, raising the possibility of its collapse.
The firm’s products depended on American chips and other components and is unable to continue operating without key supplies.
“Major operating activities of the company have ceased” as a result of the US decision, it said in a filing Wednesday.
ZTE, which makes telecoms equipment and handsets, is still “actively communicating” with the US side “to facilitate the modification or reversal” of the ban and “forge a positive outcome“, the filing said. US officials imposed the seven-year ban last month after ZTE allegedly made false statements regarding its settlement of a case involving the illegal sale of goods to Iran and North Korea.
The firm pleaded guilty to the charges in March last year and was hit with $1.2 billion in fines. The tough sanctions come as the battle over technology takes centre stage in a US spat with China focusing on trade and industrial policy.
At the time the measure was introduced, one Chinese investment bank estimated the firm had only one or two months’ supply of hardware and software components on hand. In Wednesday’s statement the firm said it still “maintains sufficient cash and strictly adheres to its commercial obligations“.
Trading of its Hong Kong and Shenzhen-listed shares has been halted since the US decision. Beijing has been closely following the developments around ZTE, a company with 80,000 employees and which is headquartered in southern China.
The company said Sunday it had submitted a request to the US commerce department for a stay of the export ban, along with supplemental information.
And Chinese officials protested against the ban in discussions with a high-level US delegation last week and said the US side would discuss the matter with President Donald Trump.