Tuesday, 22 May, 2018

Trump says he wants the Commerce Department to lift ZTE's export ban

ZTE paid US tech firms US$2.3bn for parts, report Help Me, Tom's Guide: What Are Good Alternatives to ZTE's Phones?
Elsie Buchanan | 14 May, 2018, 04:43

U.S. President Donald Trump said on Sunday that he and Chinese President Xi Jinping are working to give Chinese telecom company ZTE Corp "a way to get back into business, fast".

Somewhat bizarrely, Trump cited a loss of jobs in China as a motivating factor.

While it's not surprising that Trump would announce his support for such a move on Twitter, the fact that he's so forcefully supporting ZTE in the first place raises eyebrows for a number of reasons.

While the ZTE case has a specific legal basis, the ban comes as US-China trade relations have hit a rough patch, amid an intense rivalry for supremacy in key technology fields such as artificial intelligence and 5G, the next-generation wireless systems in the works. As one of the world's largest telecom equipment makers, ZTE relied on United States companies such as Qualcomm and Intel for components. American companies are said to supply 25% to 30% of components used by ZTE, which makes smartphones and gear for telecom networks.

ZTE is not among Qualcomm's publicly disclosed largest customers, which include Apple Inc, Samsung Electronics Co Ltd and Chinese smartphone makers Oppo and Vivo.

The US government launched an investigation into ZTE after Reuters reported in 2012 the company had signed contracts to ship millions of dollars' worth of hardware and software from some of the best known US technology companies to Iran.

Commerce Secretary Wilbur Ross last month accused ZTE of misleading the Department of Commerce and warned, "This egregious behavior can not be ignored".

Potentially, there may be pressure behind the scenes from USA suppliers who fear a loss of business as companies like Taiwan's MediaTek plan to step up in a bid to work with ZTE in the event that it is blocked from US partners.

Rafael Nadal breaks John McEnroe's 34-year document
Nadal wouldn't extend the record further though, dropping his very next set to Dominic Thiem in the quarterfinals of Madrid Open. By this stage, though, Thiem did not need anybody telling him that he was on his way to a major upset victory.


Then, of course, the President is involved in an aggressive trade dispute with China, which, on the US side, included tariffs on about $60 billion of Chinese goods, the bulk of which were focused on the high-tech industry. In a stark announcement earlier this week, the Chinese telecom giant confirmed it was shutting down "major operating activities".

Tensions with China remain high, as both Washington and Beijing have threatened to impose tens of billions of dollars' worth of sanctions on each other's exports, which could have a profound effect on many US industries, especially agriculture. "They are not simply going to be able to resume business as usual", he said.

At the Beijing talks, the Trump administration handed China a list of hard-line demands that trade experts said could make it even more hard to resolve the trade disputes.

Recently, though, the Trump administration also has sought to limit the encroachment of Chinese telecommunications firms in the United States.

Trump's announcement drew sharp criticism from a Democratic lawmaker, who said the move was jeopardizing USA national security. It "goes against the steady stream of security warnings about ZTE", he added.

Accelerating independence drive James Lewis, a technology specialist with the Center for Strategic and International Studies, said the tensions are likely to prompt China to step up efforts to disconnect from the U.S. tech sector.

FILE PHOTO: A ZTE smart phone is pictured in this illustration taken April 17, 2018.

Whether or not ZTE actually gets another chance is another matter. Oclaro, which earned 18 percent of its fiscal 2017 revenue from ZTE, fell 17 percent.

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