The US Commerce Department has signed an agreement with to lift the export ban on ZTE.

Wei Shi

July 12, 2018

2 Min Read
ZTE's export ban is set to be lifted

The US Commerce Department has signed an agreement with to lift the export ban on ZTE.

In keeping with the style of the current US administration the move was communicated via a tweet.

View post on Twitter

In practice this will complete the outstanding part of the $1.4 billion penalty agreement ZTE reached with the Department in June, coming on top of the $1 billion it already paid. In addition, the original seven-year export ban will be converted into a ten-year suspended ban, and ZTE will still need to hire an external compliance monitor appointed by the Department.

The price ZTE has paid to get here, in addition to the monetary loss, includes a wholesale change of its Board and its management, the loss of half of its market value, damage to its brand, and a lasting suspicion from its customers. They will look for potential alternative suppliers if they have not already done so.

With the ban lifted, ZTE will be able to resume its global business using American technologies and components, in particular the microchips. This will be good news for companies like Qualcomm, Intel, TI, Broadcom among others, and even better news for the smaller suppliers who have relied more heavily on ZTE. Indirectly, as ZTE is one of the major Android handset makers, lifting the ban will also be a positive to Google.

However, not all is rosy for ZTE yet, especially its fortune in the US market. The FCC named ZTE in its NPRM as one of the suspect vendors whose equipment and services could pose threat to national security, therefore limiting the prospect of ZTE expanding its infrastructure business in the US.

Going further up the political hierarchy, the bi-partisan “National Defence Authorisation Act” passed in the Senate included an amendment aiming to reverse the “goodwill” extended by President Trump to China to save ZTE from death. The bill will be discussed with the House for a comprise version. Chuck Schumer, the Senate Minority Leader, was clearly unhappy with the latest agreement:

View post on Twitter

With the uncertainties in the FCC and the Congress hanging over its head, and seen against the backdrop of the US-China trade dispute, instead of being the beginning of the end of the ZTE saga, as its lawyer claimed, this agreement is more like the end of the beginning. How the rest of the chapters will pan out remain to be seen. In short term, however, the agreement is a boost to the market. ZTE’s share price rose by 25% on the Hong Kong Stock Exchange.

About the Author(s)

Wei Shi

Wei leads the Telecoms.com Intelligence function. His responsibilities include managing and producing premium content for Telecoms.com Intelligence, undertaking special projects, and supporting internal and external partners. Wei’s research and writing have followed the heartbeat of the telecoms industry. His recent long form publications cover topics ranging from 5G and beyond, edge computing, and digital transformation, to artificial intelligence, telco cloud, and 5G devices. Wei also regularly contributes to the Telecoms.com news site and other group titles when he puts on his technology journalist hat. Wei has two decades’ experience in the telecoms ecosystem in Asia and Europe, both on the corporate side and on the professional service side. His former employers include Nokia and Strategy Analytics. Wei is a graduate of The London School of Economics. He speaks English, French, and Chinese, and has a working knowledge of Finnish and German. He is based in Telecom.com’s London office.

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