Taiwan’s MediaTek given permission to resume microchip exports to ZTE

PUBLISHED : Tuesday, 08 May, 2018, 1:36pm
UPDATED : Tuesday, 08 May, 2018, 11:11pm

Taiwanese chip company MediaTek has received permission from authorities to resume sales to ZTE Corp after the US government banned American companies from selling parts to the Chinese telecom equipment and smartphone maker. 

Taiwan’s Ministry of Economic Affairs on Friday granted an export permit to MediaTek, which supplies chipsets for ZTE smartphones, while several other Taiwanese companies are waiting for similar approvals, The Wall Street Journal reported on Monday. 

A spokesperson from MediaTek confirmed on Tuesday that the company has received a permit to ship to the Chinese telecoms maker. ZTE did not immediately respond to a request for comment.

Taiwanese companies, though not directly covered by the US ban, were required to obtain an export permit before selling to ZTE after Taiwan’s Bureau of Foreign Trade classified ZTE and its subsidiary ZTE Kangxun Telecom as “controlled export targets”.  

MediaTek announced on April 28 that it was applying for an export permit at the request of the bureau, one day after the company denied media reports that it was barred from selling to ZTE at the request of the Taiwan government.

MediaTek derived US$10.5 million, or 0.63 per cent, of its revenue from ZTE in the third quarter of last year, according to Bloomberg data. Up to 11 Taiwanese companies are suppliers to the Chinese telecom firm, according to Bloomberg. 

ZTE seeks stay of US ban, asks employees to ‘welcome coming of dawn’

MediaTek’s resumption of chip exports to ZTE is likely to give the Chinese smartphone maker a lift after the US imposed a seven-year ban on American companies selling products, services or technologies to it, which sent the company into “a state of shock” according to ZTE’s non-executive chairman Yin Yimin. 

ZTE halted trading of its shares in Hong Kong and Shenzhen on April 17 pending the release of information.

The US government slapped the ban on ZTE to punish it for allegedly making false statements about corrective action taken after an investigation into sales of its equipment to Iran. The ban also dragged down shares of some of its suppliers such as US optical component makers Acacia and Oclaro.

Intel, Microsoft, Qualcomm and Micron Technology are among the US suppliers, selling products to ZTE, according to data compiled by Bloomberg.

The Shenzhen-based telecommunications equipment provider has been “proactively communicating with relevant departments of the US government”, ZTE said in an internal memo to employees on Friday. The company is striving to resolve the matter “as soon as possible” and will continue to maintain close communication with relevant parties, the memo said.

Additional reporting by Li Tao