China's ZTE may lose Android software licence as U.S. market woes build

China’s ZTE shares suspended after US hits company for breaking plea bargain over Iran exports

Last year ZTE shipped 46.4 million smartphones ranking seventh globally out of Android-based manufacturers and commanding around 12 percent of the U.S. market.

Apparently, ZTE and Alphabet have been in discussions since the ruling on Tuesday, trying to determine whether or not ZTE will be allowed to use Android on its devices following the ban.

A 2016 report released by a Chinese regime-affiliated think tank-which has resurfaced in recent days due to the news of the USA ban-reveals just how troubling the situation will be for ZTE.

The official document from the US Department of Commerce states that ZTE may not "participate in any way in any transaction involving any commodity, software or technology", which clearly would include Android under the proposed order. In March, the company admitted to USA officials that it had not disciplined the 35 others.

"China has consistently asked Chinese companies to comply with the laws and policies of host countries and manage their businesses in line with laws and regulations", the spokesperson added.

The ban and fine was put in place after a 5-year investigation found that ZTE had circumvented embargoes on shipping US-made components into both Iran and North Korea using a series of shell companies.

"ZTE made false statements to the US government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation", Secretary of Commerce Wilbur Ross said in a statement.


Saying ZTE was likely to miss shipments and lose orders, brokerage Jefferies downgraded its rating on the firm to "underperform" from "buy" and slashed its price target to HK$15.72, almost 40 percent below the firm's closing price prior to Tuesday's trading halt. A number of other chip suppliers will be affected by the ban. All told, ZTE purchased 53 percent of its chips from American firms, worth $3.1 billion. While governments around the world would have done risk assessments on infrastructure providers, the timing of this announcement indicates the potential for this to be an act of solidarity between the United Kingdom and the USA, either in dealing with ZTE or as a stance towards the Chinese government.

Meanwhile, Britain also took an action against ZTE.

Huawei's planned deal with US carrier AT&T to sell its smartphones in the United States collapsed in January after USA lawmakers lobbied against the idea to federal regulators, citing security concerns.

Amid a steady drip of bad news, Huawei has laid off its vice president of external affairs, Bill Plummer, and four other employees at its Washington office, according to sources familiar with the matter.

In March, electronics retailer Best Buy announced that it cut ties with Huawei and will stop selling Huawei devices. According to a 2005 study by RAND Corporation, Ren was a former director of the Chinese military's Information Engineering Academy.

The company slashed lobbying expenditures to $60,000 in 2017 from $348,500 in 2016, according to Huawei filings. She was in charge of business with different governments and their militaries.

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