ZTE Shuts Down Main Business Operations After US Ban (techcrunch.com)

An anonymous reader quotes a report from TechCrunch: ZTE wasn't kidding around when it suggested that a U.S. Department of Commerce order would "severely impact" its survival. It's hard to image a successful path around the seven-year ban on the sale of U.S. products to the company imposed after it reportedly failed to sufficiently reprimand staff for flouting Iranian sanctions. Earlier today, in fact, the Chinese smartphone/telecom manufacturer announced that it had ceased its main business operations as it attempts to figure out the best way forward. "As a result of the Denial Order, the major operating activities of the company have ceased," the company wrote in an exchange filing spotted by Reuters. "As of now, the company maintains sufficient cash and strictly adheres to its commercial obligations subject in compliance with laws and regulations."

Comments

What?

[JBMcB]

ZTE looks like a huge company with operations all over the world. According to Wikipedia, cell phones only account for roughly 29% of their operations. So being shut out of one market (albeit a major one) in one sector of their business is enough to knock out the entire company? Something doesn't smell right.

Re:What?

[MightyYar]

The electronics supply chain is full of American parts and IP. You could probably build a competitive electronic doodad without any American content, but you'd need to do that from the get-go and until recently they had no reason to do this. It will take many months or years to put out new versions of their products - and in the meantime, they have no suppliers to keep manufacturing going.

Re:What?

[hazardPPP]

What this will do is motivate Chinese companies to accelerate their shift away from the use of any kind of American IP, services, or subsystems.

In the end, all Chinese tech companies are going to have a fully Chinese-sourced technology "stack" for all of their products, so that they can sell to whomever they please without worrying about the US government.

Re:First time

[frank_adrian314159]

Then you haven't been paying attention, moron. The Iran sanctions were mentioned in the reports that initially came out.

You usually can't stop them

[drnb]

The fact that any company sold anything to Iran at all under sanctions was basically a "let's see you stop me" move, and they got rightly called on that.

True they didn't have the sophistication to create a cutout company. A Czech company created a non-EU cutout company to sell goods to, who would in turn sell goods to Iran. Different ownership, a friend of a friend owned the cutout. The Czech company got its extra sales at a good price, the cutout got a good markup and basically reshipped unopened boxes. The Iranian buyers paid noticeably more for the goods but it understood the complications and workaround.

Now this was possible since the goods were consumer luxury items. Not tightly controlled and tracked military grade type stuff. YMMV depending on the goods.

The tech press has covered this wrong

[williamyf]

Most of the tech press is centered around the smartphone business (TFA is one of the few I've seen which does not make much emphasis on Smartphones, but does not tell the whole story), and the lack of Qualcomm Chips and Google services on the phones, but the problems run much deeper.

The bulk of ZTE's money do not come from the terminal business (Smartphones + CPEs [think ADSL/GPON modems and Wifi]). No, the bulk of ZTE's money comes from telco network gear, and there the sanctions already got their effect.

ZTE uses Acacia's chips for their optical (think fiber optics) equipment, and Acacia's shares are way down as a result.

You need Broadcom chips for the CPEs, MIPS and Brocade chips for the telco routers, PowerPC chips for the telephony switches, Altera's FPGAs for a myriad of specialized functions. and the list goes on and on...

You need certain OSs for your BSS/OSS systems. Things Like RedHat and Suse (yes, Linux is FOSS, but in order to play nice with the telcos, you need the certified Cosher/Halal versions).

While on the subjetc, while the guys of OpenSS7 have done a huge aamount of work, the SS7 solutions available and viable on linux are all the commercial variety (or you have to go to the ussual suspects), and all based in the USoA. Same for the X.700 implementations (SNMP's mucular, smart, badass, MMA older brother) in Linux and other OSs (HP-UX, AIX and Solaris).

Your boards run all sorts of RTOSs, for instance, wind-river...

Your IPTV gear needs all sorts of Processors and SW subjected to the embargo...

As a result of the ban, all these technologies are off-limits to ZTE now.

So no, this is not about "Qualcomm chips and Google's OS for Smartphones". If it were only that, the company would continue operating, and in less than 18 months, you would have a "Mediatek + AOSP based" Smartphone from ZTE taking over a decent chunk of market...

Good we have slashdot to get/set the record straight.

Good luck with cell phones

[JBMcB]

A LOT of the IP for cell phone technology is covered by loads of patents in the US (and most anywhere else a Japanese, Korean or European cell phone company sells phones, which is pretty much everywhere) Good luck building anything that connects to a 4G network without running through a gauntlet of patent infringement claims.