ZTE to cease operations of main business due to U.S. sanctions

ZTE requests that US Department of Commerce suspend seven-year ban

Now, it's been revealed that the company is ceasing major operations. Beijing has closely followed the developments around ZTE, a company with 80,000 employees headquartered in southern China. The US hit the company with a $1.2 billion fine, but agreed to suspend an export ban for a three-year probation period.

The Commerce Department slapped ZTE with a seven-year product sales prohibit in an instance between exports of electrical gear into Iran along with North Korea. Then, to hide its activities, ZTE allegedly lied and deleted emails to cover its tracks and actively sought to resume shipments during the investigation.

The Chinese companies have denied any wrongdoing.

Because the company is so important to Beijing's tech ambitions, Lee believes the Chinese government will "do its best" to help ZTE resolve its dispute with the United States. Nearly one third of the parts that the company uses are supplied by Intel and Qualcomm, the report says. Analysts have said it will be hard for ZTE to stay competitive even if it could find non-American suppliers.

ZTE, or Zhongxing Telecommunications Equipment, was initially founded in 1985 as Zhongxing Semiconductor Co.

ZTE, China's second biggest telecom, is working to have the ban modified or reversed, Reuters confirmed. ZTE did say that it is trying to get a modification or reversal to the ban, though.

The company said on Sunday it had submitted a request to the USA commerce department for a stay of the export ban, along with supplemental information.

ZTE, a major supplier of telecoms networks and smartphones based in southern China, earlier said the ban threatened its existence by choking off access to USA suppliers of key technology and components like microchips.

What Does This Mean For Consumers?

ZTE has also suspended its online store, and removed device listings on sites like Taobao.

Chinese smartphone makers have typically had a hard time infiltrating the USA market, with Huawei repeatedly struggling to land deals with carriers in America, which has seemingly led to the company backing out of American territory. The only companies that sell more smartphones than ZTE in the United States are Apple, Samsung, and LG.

A telecom components buyer specialising in ZTE products said he had seen the effects of the production halt ripple into the market, with prices for available ZTE goods jumping 50 percent or more.

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