ZTE suspends smartphone sales following US ban

Reversal rests on “unlikely” last-minute reprieve from Washington

ZTE

Andrew Barclay

Published: 6:56pm, 10 May 2018

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This article originally appeared on ABACUS

The fourth biggest smartphone vendor in the US has stopped selling smartphones.

ZTE has ceased "major operating activities" a month after the US government banned the telecom equipment manufacturer from buying critical components from American suppliers.

A screenshot of ZTE's website displaying the message "youth is for struggle." (Picture: South China Morning Post).

As of Thursday, the company’s store on the popular Alibaba-owned e-commerce site Tmall displayed a message that it was “undergoing maintenance” and showed a photo of rowers with text that roughly translates to "youth is for struggle."

(Abacus is a unit of the South China Morning Post, which is owned by Alibaba.)

The company’s official website in China also showed the same image.

Last month the US government banned American companies from doing business with the Chinese smartphone maker after it failed to punish employees who breached sanctions against Iran.

It was a huge blow for ZTE: Reuters estimates it buys 30% of its components from US companies. More than half of ZTE's smartphones are powered by Qualcomm’s chips, and a ban could prevent it from using Google's version of Android -- meaning no Google Maps, Gmail or Google Play Store.

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The move led ZTE's chairman to issue a dramatic internal memo, saying "I'd like to urge all employees to maintain a state of calm, to man one's post and do one's job well."

The company is holding out hope that an appeal next week from China’s top economic adviser will help the company avoid what some already see as a done deal.

One expert told us that a “stay of execution” is unlikely, and if ZTE's appeal is turned down, Beijing is likely to "react strongly."

“US officials are targeting ZTE primarily out of law enforcement motivations,” said Eurasia Group’s Paul Triolo. “This makes little difference in Beijing, which views the action against ZTE as intended to contain China’s rise as a technology power.”

Any retaliation might include delaying the renewal of licenses for US companies operating in China or cancelling some altogether.

It comes as China makes a push to become less reliant on foreign companies for essential technology like semiconductors.

“We must cast away false hopes and rely on ourselves,” Chinese President Xi Jinping recently said.

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