Want to read Slashdot from your mobile device? Point it at m.slashdot.org and keep reading!

 



Forgot your password?
typodupeerror
Businesses Android Government United States Technology

ZTE Shuts Down Main Business Operations After US Ban (techcrunch.com) 134

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."
This discussion has been archived. No new comments can be posted.

ZTE Shuts Down Main Business Operations After US Ban

Comments Filter:
  • by Anonymous Coward

    Making all there old products....

    • Making all there old products....

      That's exactly what will happen. The ban is specifically against ZTE, so he would have to ban a new company if it started up. This game could go on for a while.

    • by Anonymous Coward
      As ATE, starting again from the beginning of the alphabet.
    • by Anonymous Coward

      Learn how to spell you fuckwit.

    • ZTE is a publicly traded company, and a massive one at that. What you're proposing is that every single ZTE shareholder would have to somehow invest in this new company, every single employee would have to resign from the original and join the new, and every single asset would have to be transferred to the new company tax free.

      Or they could make it even more complicated by picking the people who would be in ZTE2. And selling the company's assets and hoping enough shareholders would be interested in the s

      • Arguably, stockholders don't matter at all. It sounds like all their institutional investors will get their money back, with interest.
        • Yes sir.

          Even when a preferred class of stock is not issued, corporate debt repayment is often structured to protect the common stockholders last in any liquidation scenario.

      • ZTE is a publicly traded company, and a massive one at that. What you're proposing is that every single ZTE shareholder would have to somehow invest in this new company, every single employee would have to resign from the original and join the new, and every single asset would have to be transferred to the new company tax free.

        No, most shareholders are irrelevant. However the new company will have the same major shareholders (founders, early investors, communist party officials, etc ... the pre-public and government folks) and possibly the same executives. As for assets they will get the good valuable and important stuff and the old shareholders will get to keep the legacy and unimportant stuff, and the mistakes.

        I've seen this in the US. A company goes bankrupt. The previous owners/management contact the company that was suppo

      • There are a few other similar mechanisms that would make that process feasible, like founding a new company, which then merges with all of ZTE with an appropriate contract to keep everything intact. It'd have to be executed carefully to maintain viability while avoiding the ban, but such things have worked before.

        Either way, you are absolutely correct that this is an investment nightmare. Even if a ZTE holding isn't already considered practically worthless, there can't be much confidence left in the current

        • The most difficult part of that cunning plan would be doing it in a way that the DOC didn't notice and then simply apply the exact same ban to the new company.

    • Easier -- ZTE just stop using Qualcom chips.

      In fact, any sane non-US hardware manufacturer should stop using US made or designed chips.

      • by HiThere ( 15173 )

        That is, indeed, a most likely response. Also companies will start to be reluctant to invest in the US market. The import companies should do well out of that. The advertising companies less well.

        This is basically a strong vote for isolationism, in a time when the cost of crossing the oceans has significantly declined. So the costs of this action will be significant, both in terms of fostering the growth of foreign companies, and in the cost of trade groups excluding the US from consideration.

        The thing

    • by thsths ( 31372 )

      ZTE Blade 1 - I remember you fondly. My first Android phone, and so compact (and with a great screen).

  • What? (Score:4, Interesting)

    by JBMcB ( 73720 ) on Thursday May 10, 2018 @09:17AM (#56587364)

    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? (Score:5, Informative)

      by MightyYar ( 622222 ) on Thursday May 10, 2018 @09:23AM (#56587390)

      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.

    • by Anonymous Coward

      Cell phones are highly profitable things. But the Phones are not the only part of the business, so is the networking equipment meant for cellular networks.

      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.

      • by drnb ( 2434720 ) on Thursday May 10, 2018 @10:38AM (#56587850)

        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.

        • As you indicated, bans only increase cost of supply, it doesn't actually stop anything. With enough demand, the supplies will still flow, and with enough middlemen become "legal". It is basically the same concept as laundering money, only with goods.

          It only works if the demand is high enough to overcome the increase costs of bypassing the ban. In this case, a highly competitive market of Cell phones, it probably wouldn't.

    • No, US companies are not allowed to sell to ZTE. That impacts their entire company, as it would be hard to create products without American companies in the supply chain somewhere.
      • Re:What? (Score:5, Insightful)

        by hazardPPP ( 4914555 ) on Thursday May 10, 2018 @11:08AM (#56588102)

        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.

        • 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.

          Maybe. People always talk like this stuff is cost free. It's not an inevitable conclusion.

          • Many nations twist arms to have local assembly or parts, or else tarriffs. So is Iranian business so big to drop the American market and increase tarriffs in many places sewhere?

            Blame America First thinks so!

          • 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.

            Maybe. People always talk like this stuff is cost free. It's not an inevitable conclusion.

            It would've happened anyway eventually as that is openly China's strategy (see e.g. the "Made in China 2025" plan). Stuff like this just accelerates those plans.

            China never wanted to perpetually be a source of cheap labour for Western companies. From the get-go, the idea was to eventually be able to make everything independently, and to use Western outsourcing to learn.

            • Yup, Pooh Bear has come out and said China should accelerate its development of its own chips etc. Went on about the 'two bombs and one satellite' as a reference to the Cultural Revolution etc.
              Hopefully there will be less starvation this time round.

        • by JBMcB ( 73720 ) on Thursday May 10, 2018 @12:17PM (#56588740)

          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.

          • Well, actually, most of it is held by EU companies. The US dropped the baton in the whole refusal of GSM period.

            • Sorry, I forgot, one US company does have an important patent -- rounded corners.

            • By sheer numbers, LG and Qualcomm own half of the 4G encumbering patents. Nokia is the only European company that holds a significant number, which is about on par with a small US company called InterDigital that exists basically to license cell phone patents.

          • Are those patents actually enforceable in China? What about places China will or might sell to, like Iran, or African countries, or...?
        • 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.

          Well, the latter 2... ya.
          As for IP? No. They'll still use it, it will just be called something else.

      • by JBMcB ( 73720 )

        That makes sense. I was missing the supply chain component of the ban.

    • I'm not sure why you think ZTE's cellphone business is the only part that was sanctioned. There's nothing in TFS that says this, and this isn't about patents or some other narrow issue where only certain products from a company would be affected. Why would a government issue a ban on just part of a company's business for violating sanctions?

    • "only" 29%

      if you're a kid to say something so ignorant is fine

      otherwise, losing a third of business suddenly would destroy most companies.

    • They aren't just banned from selling cell phones to the US.

      They are banned from any transaction direct or indirect involving technology and software (and commodities - no idea how broad that is) that ever touched the US. There's an awful lot of US companies with IP rights on technology and software (even if they are manufactured in China).

      They could try and work around things, but that will increase costs and thus reduce their competitiveness. And the US is likely to put pressure on friendly governments to

  • by ElizabethGreene ( 1185405 ) on Thursday May 10, 2018 @09:20AM (#56587376)

    I'm saddened to see them go; I love my ZTE Blade Spark. It's a _huge_ phone for under $100. The usable area of the display is bigger than the iPhone 6/7/8 plus and the battery lasts all day. ;(
       

    • Re: (Score:2, Troll)

      by Dishevel ( 1105119 )
      Fuck them.
      Assholes circumventing the sanctions were fucking with the US bull.
      With US bulls you do not just get the horn, you get it repeatedly shoved up your ass till you are dead, then 6 more times just for shits and giggles.
    • I'm saddened to see them go; I love my ZTE Blade Spark. It's a _huge_ phone for under $100. The usable area of the display is bigger than the iPhone 6/7/8 plus and the battery lasts all day. ;(

      I have a ZTE ZMAX Pro and it is a good phone for the price, but there is nothing unfortunate about ZTE getting punished for supporting bad behavior of 2-bit despots in other countries.

      • Re: (Score:2, Informative)

        > there is nothing unfortunate about ZTE getting punished for supporting bad behavior of 2-bit despots in other countries.

        Have you looked at the history of Iran and why their leaders hate the US? Our history books like to leave out some inconvenient parts of this story.

        They have every reason to distrust us and every right to arm themselves. It's the only way to prevent my country from dropping so much freedom they end up in the stone age. If they ever doubt this path they can ask Syria and Iraq how di

        • Maybe your history books do but most history books I had growing up and that my kids have who are in school have no trouble criticizing the US in history. And I live in Texas

          But regardless of history, I'm not sure how you think our policy should be different? Just let them do whatever they want and hope they never set their sites on us or our allies again? Because what you are writing pretty states that they have every reason to hate us so we would be fools not to be watching and trying to mitigate how m

          • by Altrag ( 195300 )

            Or you know, treat them like people and try to work out a better system.

            Of course, as long as we treat Israel and Saudi Arabia's sovereignty as more important than America's, that will likely not be a plausible solution for decades or perhaps centuries. Need to get the religious bullshit out of power in all of those countries before they have any hope of cooperating with each other.

            If MBS can hold on to his power and continues to be progressive (by Middle Eastern standards at least.. then there's some hope

          • Warning: political rant ahead

            I'm not sure how you think our policy should be different? Just let them do whatever they want and hope they never set their sites on us or our allies again? Because what you are writing pretty states that they have every reason to hate us so we would be fools not to be watching and trying to mitigate how much damage they can do.

            For starters, stop making enemies when there is no reason to do so. The best example is the Iraq war of 2003, whose justification was based mostly on lies and propaganda. And the collateral damage among the population was probably worse than living under Saddam. The people of Iraq have a good reason now to hate the US.

            Also, be a bit more careful in picking your allies. Just an example:
            Supporting the mujahideen in Afghanistan in the 1980s might have looked like a good idea back t

        • You're not wrong, and neither is he.
          They do have every reason to distrust us... But they're also 2-bit despots, with a thin veneer of democracy pasted on top to keep a full-out revolt from making it through the grips of their religious police.
    • by jae471 ( 1102461 )

      I hate my ZTE (Max XL). Yes, it has a huge screen - that was my motivating factor for buying it.

      But it crashes about every two-three days, the touch screen is very flaky (completely unusable if it's charging), can't switch between two apps without it fulling killing one, and it can't even handle streaming media over bluetooth while google maps is open. $40 Kyoceras have better stability.

      I would not recommend a ZTE to anyone.

  • First time (Score:1, Troll)

    by Not-a-Neg ( 743469 )

    First time I heard someone say it was regarding Iran sanctions as opposed to xenophobia. Almost as if all the previous stories were #FakeNews.

    • careful ivan, someone is stealing your potato vodka.
    • Re:First time (Score:4, Insightful)

      by frank_adrian314159 ( 469671 ) on Thursday May 10, 2018 @09:43AM (#56587516) Homepage

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

      • by AmiMoJo ( 196126 )

        The Iran sanctions are screwing a lot of companies. Boeing just lost billions due to sales to Iranian companies being cancelled. Thousands of jobs on the line.

        • by Anonymous Coward

          Boeing said that the sanctions would not have any impact on their sales because the Iranian orders weren't entered into the order books yet.

    • First time I heard someone say it was regarding Iran sanctions as opposed to xenophobia. Almost as if all the previous stories were #FakeNews.

      I believe this was also one of the bullet points for Chinese trade sanctions; meaning, it's one of the half-dozen or so ways in which China cheats on their end of the trade agreement. They turn a blind eye to their companies that do this (and trade with North Korea).

      • Why should China's government penalize their companies who trade with Iran, which is a friendly nation and major trading partner? Or North Korea for that matter? Trading with your friends isn't a blind eye, it's two open eyes.

    • I have a good idea. You should consider reading Slashdot sometime:
      https://hardware.slashdot.org/... [slashdot.org]
      https://news.slashdot.org/stor... [slashdot.org]

  • by Anonymous Coward

    Trade wars can definitely can make things rocky, and are not necessarily easy to win...

    All China has to do in retaliation is ban manufacturing Apple/Google products in its country, and it would severely harm those companies in the US...

    • by CHK6 ( 583097 )
      That would be awesome for the long term and pretty yucky in the short term. Adversity and the grit to overcome is a great strength to have. Something we lost after the Korean and Vietnam wars. But with S. Korea and the rest of Asia making goods too, the US will do just fine. It's not like it's China or nothing. I think there are many countries willing to take the mantle of manufacturing ownership away from China and do business with the west.
    • Trade wars can definitely can make things rocky, and are not necessarily easy to win...

      All China has to do in retaliation is ban manufacturing Apple/Google products in its country, and it would severely harm those companies in the US...

      No one wins a trade war (except for the countries that aren't in the war).

      One side may be hurt worse than the other, but both sides lose.

    • Trade wars can definitely can make things rocky, and are not necessarily easy to win...

      All China has to do in retaliation is ban manufacturing Apple/Google products in its country, and it would severely harm those companies in the US...

      No, not really. There is a ready and willing talent pool here in the United States to manufacture electronics. There may be some short term pain but I don't really care if Apple only makes 7 billion instead of 8 billion or whatever the figure really is. If you call that severe harm, you're smoking what the corporate shills are selling you.

    • No, all Chinese companies have to do is stop using US made products.

      These are actually sanctions against Qualcomm, not ZTE.

  • by PortHaven ( 242123 ) on Thursday May 10, 2018 @09:47AM (#56587534) Homepage

    About a year and a half ago I got each of my kids a ZTE ZMax Pro. I went with these phones because they were both affordable and full-featured.

    They were $179 (unsubsidized). Specs were not quite on par with my LG V20, but they were decent.
    - 1080p resolution
    - 32GB storage, 2GB memory
    - Decent cameras
    - Only USB 2.0, but Type-C plug. (I got so tired of needing new micro-USB cables every other month for my kids)
    - MicroSD slot (hate that so many phones have dumped this in an attempt to force users to utilize cloud storage to increase telecoms data usage profits, I expect since T-Mobile forced everyone into an "unlimited data" war that we will see the slots return as standard on Android phones.)

    Google shows the user rating for the ZTE Zmax Pro as 4.3, which is pretty decent for a no-name budget phone. And to be honest, I've had less problems with my kids ZTE ZMax Pros than I did with either my Samsung Note 2/S5 Active.

  • by ghoul ( 157158 ) on Thursday May 10, 2018 @10:15AM (#56587692)

    China wanted to buy Qualcomm as they realized they had a dependency on Qualcomm chips but US did not allow it. Now they will try other tacks, maybe offer Qualcomm engineers huge salaries to come to China and build a competing chip. The US is like a 3rd world country now where politics drive trade decisions rather than rules.

    • The US is like a 3rd world country now where politics drive trade decisions rather than rules.

      Dude, we now have just as many job openings as we have unemployed [bloomberg.com], for the first time in ever.

      Also, the Qualcomm thing was part of the China trade sanctions, for China turning a blind eye towards companies that did business with N.Korea.

      This indirectly led to the end of the Korean war.

      If you could go back in time and choose or reverse the Qualcomm decision, which choice would you make: the one for a healthy Qualcomm, high US unemployment, and North and South Korea rattling sabres?

      Or would you choose the sit

      • Dl you trust the economic reports? From what I can tell by looking around me, the economy sucks. The problem is that official statistics ignore people who are not actively looking for jobs, they also don't count under-employment (ie, used to make $100K/yr but now working minimum wage at Burger King). I see more homeless people around than I have ever seen before, many sleeping in their cars or campers, and encampments showing up beneat overpasses and in residential areas. People are nervous about keepin

    • Now they will try other tacks, maybe offer Qualcomm engineers huge salaries to come to China and build a competing chip.

      Maybe they can even give the new company a really cool-sounding name -- say, HiSilicon [wikipedia.org].

    • The US is like a 3rd world country now where politics drive trade decisions rather than rules.

      I'm a little confused. Keeping important industries in the US (not allowing foreign ownership) is a rule (and so is allowing Budweiser to be bought). It's also what every other country (inc. China) does.

      • by ghoul ( 157158 )

        And China is roundly criticized for doing so . Their excuse is they are trying to catch up. USA is already ahead. What is USA's excuse for protecting homegrown companies?

  • by Anonymous Coward

    The message I get from this is, don't depend on any American made parts because the American govt can (and will) simply cut you off and destroy your business with no recourse.

    Surely this will decrease the wider worlds willingness to depend on American made parts and businesses?
    China is a pretty big market to potentially lose.

    • No, it won't. The Chinese play by their own set of economic rules. They're being cut off for some legitimate reasons, like not abiding by embargo terms. It won't effect foreign corporations' willingness to do business.
    • Yup. This will definitely impact sales of American parts. If this ban holds, the Chinese will work to find other suppliers outside the US, made by non-US workers and with non-US IP (if available). They will probably have to develop indigenous industries to replace the ones they are now locked out of. It will depress trade. It might increase our trade deficit or possibly increase the prices that US consumers pay for phones. It will shift even more manufacturing jobs out of the US and generally make life wors
  • by williamyf ( 227051 ) on Thursday May 10, 2018 @11:04AM (#56588068)

    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.

  • Nice that we have cut them off, BUT, China will retaliate SOON about that. Keep in mind that ZTE was controlled by the CHinese communist party, which is why they were giving out information to other nations.
    Chances are good that China will stop rare earth minerals again, BEFORE Japan has started their mining operations. America really needs to remove all critical dependencies from our economy. It is one thing to depend on an alley, but another to depend on somebody like CHina.
    • by caseih ( 160668 )

      Regardless of whether the US has the moral high ground, it also behooves companies in other countries, especially China, to likewise remove all critical dependencies on the US from their economy. It goes both ways.

      A fully independent China is far more frightening to American interests than anything we have now, trade and IP issues notwithstanding. I think this move is going to backfire on the US in the long run. China is nearly 20% of the world's population! If we think we can ultimately control them wi

    • It is one thing to depend on an alley

      Don't depend on alleys, they're much too narrow. Build decent infrastructure like China.

    • So what do you suggest? Sanctions against small weak countries only?

    • What! they haven't started yet? You said it was done regularly, and that the 5 km underwater mine should be cheaper and easier than ground based...
      • Japan has not started on the REM mining. Canada and others are already down at 3-4km working just fine. Same equipment will do 5km just fine.
        • You didn't say it was theoretically possible based on 3-4km. When someone mentioned Japan would need a 5 year feasibility study, you said it was 'already done regularly' at 5km despite the article itself mentioning the study...

          Why not link to even 1?

          Link to even 3-4km if that is the best you can do...
          Otherwise it's just more baseless claims from you.

  • Access to a market is never unfettered. For better or worse, we trade some governmental control of access to the market for various benefits (quality control, protection for domestic competition, etc.), so market regulators are thus granted the right to set conditions for market entry.

    In this case, we demand that participants not trade with our enemies. ZTE violated that rule. We imposed a limited regime of punishments--a corporate fine and a request that the responsible corporate officers be punished--that

  • Demand will be fulfilled by other suppliers that follow the rules.

    Plain and simple. Unfortunately this is overdue.

    There are obviously some good people in the company but they have to take responsibility for allowing a bunch of pirates run around.

Always leave room to add an explanation if it doesn't work out.

Working...