Telecom equipment-maker ZTE Corp. on Friday called USA sanctions against it "unacceptable" and potentially life-threatening, but said it will still try to resolve the matter through talks with Washington.
Apart from all these, it would be interesting to see if the ZTE ban on procuring the USA developed foreign supplies affect its nubia sub-brand.
"The U.S. ban may cause ZTE to enter a state of shock and directly harm the company's employees, operators around the world, customers, end-users and shareholders".
Canalys, a technology consultancy, estimate that a higher 65 percent of ZTE phones contain Qualcomm chips. ZTE won't take the ruling sitting down, however, and has responded to the DOC's ban, threatening "judicial measures" if they need to.
ZTE was accused by the US Commerce Department of failing to follow through on pledges to discipline employees responsible for illegal exports to the Iranians and North Koreans.
Google, owner of Android, the world's most used mobile operating system run on virtually all smartphones other than Apple's iPhones, may suspend ZTE's license in accordance with the new measure. "But there is no provision now for that to occur", the official said, who declined to be identified due to the sensitivity of the matter.
ZTE said its board postponed a meeting to approve the results while it reviews the order. In March, the company admitted to US officials that it had not disciplined the 35 others.
The Commerce Department determined that ZTE made false statements to the Bureau of Industry and Security during the 2016 settlement negotiations and during its 2017 probationary period.
ZTE and Huawei have been shut out of the US market for network switching gear since a congressional panel in 2012 labeled them security threats. It also vowed to keep on resolving the issue through negotiations with the US government.
A state-backed Chinese trade body said the ZTE case represented a "milestone" for China Inc and highlighted compliance risks its corporate sector is facing.
"The action has given way to widespread market concern on the USA trade and investment environment", a spokesman said.
Qualcomm was not immediately available for comment.
The Treasury investment restrictions are aimed partly at pressuring China to lift requirements for foreign companies to form joint ventures with local firms that lead to technology transfers, a policy the administration deems unfair when the United States has no such restrictions on Chinese firms.