China’s 5G expansion plans threatened as ZTE is pinched by US export ban, trade tensions
ZTE, the world’s fourth largest telecommunications equipment supplier, sets up crisis team as company faces challenge to meet orders
Amid the incessant headlines about the rise of China into a technology powerhouse, the ban on the sale of American-made parts to ZTE exposed the soft underbelly of the country’s tech industry: a lingering dependence on US semiconductors and software.
If no settlement is reached, the seven-year export ban would not only hurt ZTE, China’s largest listed telecommunications equipment manufacturer, but deal a blow to the country’s goal of recasting itself as a leading innovator. It would also handicap the mainland’s ability to build the world’s largest 5G network by the end of this decade.
“The US trade sanction is a major roadblock on China’s path to become a global hi-tech leader,” said Paul Haswell, a partner who advises technology companies at the international law firm Pinsent Masons.
Without the US-made chips and other components that it needs, ZTE would be hard-pressed to meet its network equipment as well as smartphone orders around the world, and push forward its 5G-related research and development.
Hong Kong-listed ZTE and Shenzhen-based rival Huawei Technologies have been spearheading the development and commercialisation of 5G-related technologies on the mainland. Both companies are also the primary network equipment suppliers to nationwide carriers China Mobile, China Unicom and China Telecom, helping them on 5G infrastructure deployment initiatives.