ZTE braces for multi-billion dollar losses as US, China negotiate

As it scrambles to remain alive, ZTE is about to take a big blow on its bottom line. The Chinese company is reportedly expecting to face more than $3 billion in losses because it cannot purchase anything from American suppliers, Bloomberg reports. ZTE was slapped with the seven-year ban by the U.S. Department of Commerce just last month.

The situation goes back to 2016 when ZTE illegally shipped products to Iran and North Korea. Upon being caught, the U.S. issued a fine exceeding $1 billion and asked the company to modify its leadership. ZTE didn’t comply, so now it’s been exiled from the country.

ZTE probably can’t sustain itself in the long-term given its strong reliance on American suppliers, though. Qualcomm’s chips are off limits, and even the use of Android with Google-made apps is in limbo.

Aside from partners pulling out of deals, the company is also struggling with a massive workforce not being able to do much. Tens of thousands of employees aren’t able to work. ZTE could be losing as much as $16 million per day as the sales ban continues. However, if the sales ban does get lifted, ZTE should be able to resume operations within hours.

Now the company anxiously waits for the result of negotiations between the U.S. and Chinese governments. Both sides have been discussing a resolution on their trade dispute in recent weeks.

Article source: https://www.technobuffalo.com/2018/05/23/zte-us-sales-ban-multibillion-dollar-losses-trump/