ZTE could give up its smartphones

This major player in telecom is forced to stop production because it can no longer provide components in the United States. Rumors are circulating about a possible sale of his business.

ZTE is a Chinese telecom giant well placed as a equipment maker in the 5G race. But his rise has been thwarted by sanctions against him by Washington. ZTE no longer has the right to provide components on US soil for braving the embargo against Iran and North Korea. A penalty imposed mid-April and valid for seven years. The problem is that ZTE can hardly do without Qualcomm processors. It has had to suspend its production of smartphones but also sees its activity in the optical fiber disturbed.

A list of potential buyers is circulating

"The main activities of the group have stopped," ZTE acknowledged in a statement on Wednesday. The company has also decided to appeal. Local media also report rumors about the divestiture of the manufacturer's smartphones division. Huawei, Oppo and Xiaomi could be on the list of potential buyers.

AFP reports that a buyer of telecom equipment, Zhao, said the impact of US sanctions would already be spectacular. According to him, the prices of some ZTE products, which had become rarer, would have jumped "by 50% or more". "They stopped the production of all items containing chips," and if the disruptions occur, "ZTE equipment (still available) will no longer be useful," he said.

The threat of a Sino-US trade war

At the heart of the Sino-US dispute, a geopolitical issue: ZTE had pleaded guilty in 2016 to Washington to have re-exported equipment purchased in the United States to Iran and North Korea, despite a US embargo, and last year was fined $ 1.2 billion (one billion euros). But Washington now accuses ZTE of failing to keep its promises afterwards and of making false statements about the sanctions it was supposed to adopt against some of its leaders. As a result, the United States last month banned electronic exports to ZTE. "The company is actively pursuing its communications" with the US administration to "facilitate the modification or cancellation" of the decision, insisted ZTE in its statement.

This decision comes amid the specter of a trade war between China and the United States, with the threat of punitive US tariffs potentially imposed as early as 22 May. Talks in Beijing last week by a high-ranking US delegation have failed, and Chinese Vice Premier Liu He will visit Washington next week to continue talks.

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