ZTE says it has stopped major operations following United States export ban

ZTE says it has stopped major operations following United States export ban

Reuters reported that work had slowed for ZTE employees since Commerce cut the firm off from its us suppliers.

ZTE announced it has shut down operations and closed its online store following a U.S. ban against it.

The U.S. action, first reported by Reuters, could be devastating to ZTE.

In a separate filing last week, ZTE said that it would not rule out taking legal actions against the export ban.

The news was revealed in a press release which noted that, "the major operating activities of the Company have ceased". "As of now, the company maintains sufficient cash and strictly adheres to its commercial obligations subject in compliance with laws and regulations".

As one of the world's largest telecom equipment makers alongside Huawei [HWT.UL], Ericsson (ERICb.ST) and Nokia (NOKIA.HE), ZTE relies on US companies such as Qualcomm (QCOM.O) and Intel (INTC.O) for up to a third of its components. However given the nature of ZTE's violations - shipping United States technology to Iran and North Korea, and then lying about employee reprimands - it will be a significant battle to get the export ban meaningfully altered. A request for suspension of the ban has been submitted last Sunday. ZTE relies heavily on USA companies to supply as much as a third of its components.

Part of the agreement included letting go of four of its senior employees and disciplining 35 others by reducing their bonuses or reprimanding them, Reuters notes.But according to the Department of Commerce, ZTE rewarded its employees for illegal conduct instead.

Later that month, Taiwan's government ordered local companies to halt their business with ZTE prior to receiving approval.

The Department of Commerce determined ZTE made false statements to the Bureau of Industry and Security specifically in 2016 and 2017.

Updated on May 9: ZTE says it has ceased main business operations due to USA ban.

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