It was a tough day for ZTE as a ban was made by the US Department of Commerce. The US government agency announced a seven-year ban against the sale of goods sporting U.S. components to the Chinese manufacturer.
The reason behind this ban is because of the company’s violation of terms on the sanctions case it has since been facing since 2016, when it was accused of dodging US sanctions on Iran. It was discovered that the Chinese company was selling US technology to Iran through the use of several shell companies. After this discovery, the US Department of Commerce threatened to shut off ZTE from its US supply chain partners, including Qualcomm and Google licenses. The Chinese company, however, was able to avoid this by paying almost a fine of up to a billion dollars.
A year after ZTE was accused of such, the company pleaded guilty to violating these sanctions with Iran and North Korea. Ever since then, the company promised to fire four senior employees and put a disciplinary action on 35 others. Unfortunately, it was discovered that ZTE had not kept up with its end of the agreement as the 35 other employees had not received any disciplinary action or reduced bonuses.
With the ban in place, ZTE will definitely have limited options for its components; especially since Qualcomm is part of that ban. It’s also very likely that the upcoming ZTE Axon 7 won’t be getting a successor; unless the company decides to use MediaTek chips.
For now, the ban does not affect ZTE’s sale on smartphones in the US so it’s still possible to get your hands on one of these phones. But for sure, ZTE will be affected by this ban once Google will be included in it.
According to Reuters, Alphabet (Google’s parent company) and ZTE are both still undecided on whether or not the latter will be able to use the Android operating system. Considering Android is an open source software, it’s hard to put a limit on who can use it. If ZTE’s GMS license (Mobile Application Distribution Agreement, or MADA) gets pulled, it could mean that ZTE may have no choice but to limit its smartphone business to China.