Update | ZTE chairman appeals for calm amid US ban ‘crisis’
ZTE has been plunged into what its chairman calls a state of crisis after the US banned American firms from selling parts to the Chinese telecommunications company for seven years
ZTE chairman Yin Yimin issued a call for calm to employees after the US government banned American firms from selling parts to the Chinese telecommunications equipment giant for seven years, a move that could wreck its plans to build everything from smartphones to gear for enabling 5G networks.
“The company takes the US ban seriously and has immediately set up a crisis team, with every division analysing and coming up with measures to deal with the crisis,” Yin said in an internal memo to employees seen by the South China Morning Post. “We need the combined strength of ZTE’s 80,000-strong staff in this tough time. I would like to appeal to all employees to maintain a state of calm, to man one’s post and do one’s job well. The company is actively communicating and giving its all to resolve this crisis.”
The US government banned sales by American companies to China’s ZTE Corp to punish the Chinese telco equipment maker after it allegedly made false statements during an investigation into sales of its equipment to Iran. The move, which also dragged down shares of some of its suppliers, reactivates a block on ZTE’s exports and all sales to the company by US suppliers for seven years. To add to the woes, Britain’s National Cyber Security Centre (NCSC) has written to UK telecoms providers warning them that the use of ZTE's equipment and services could pose a national security risk, the BBC reported.
ZTE will probably miss shipments and lose orders on handsets and transmission equipment as a US export ban leads to a lack of components for China’s largest-listed telecommunications equipment manufacturer, analysts said.
An export ban means US component makers will be prohibited from selling to ZTE, which regularly buys handset chipsets from Qualcomm, and optical components from such companies as Maynard, Acacia, Oclaro and Lumentum, Jefferies equities analyst Edison Lee wrote in a report titled “All hell breaks loose”.
US slaps China telecoms firm ZTE with 7-year ban for sanctions breach
Intel, Microsoft, Qualcomm and Micron Technology are also among US suppliers to ZTE, according to data compiled by Bloomberg. Jefferies cut its recommendation on ZTE’s stock to underperform and slashed its share price target by more than half to reflect its expectation that profit this year will slump by 51 per cent.