Trump pledges to safeguard Chinese telecoms jobs

Posted May 14, 2018

ZTE, one of China's leading technology companies, has announced it will end "major operations", after the US government barred American firms from doing business with the telecom equipment maker.

"If ZTE is truly considering selling its mobile handset business, then the potential end for the company is near", Earl Lum, the President of EJL Wireless Research, a consultancy and research firm based in the U.S., said.

The whole thing led many to speculate about whether or not Trump had another reason for his sudden about-face on ZTE.

The company has been banned from selling equipment in the US, but shutting out supply chain partners like Intel, Qualcomm and Google is potentially catastrophic.

Trump's reversal could have a significant impact on shares of American optical components makers such as Acacia Communications and Oclaro which saw their stock prices fall when USA companies were banned from exporting goods to ZTE. The punishment resulted in ZTE suspending all major operations, according to a May 10 statement.

ZTE pleaded guilty to making illegal shipments to Iran and North Korea.

Chinese telecom giant ZTE said its major operations had "ceased" following last month's USA ban on American sales of critical technology to the company, raising the possibility of its collapse.

The White House did not immediately respond to a request for comment.

Writing on Twitter, Trump said he had issued instructions for officials to come up with a rescue plan, saying too many jobs were at risk.

The firm's products depended on American chips and other components and is unable to continue operating without key supplies. The person reiterated ZTE's recent point about its cash reserves which allow it to stay afloat over the troubled period, though it's still unclear how large those holdings actually are, i.e. how much time could they buy.

ZTE is not among Qualcomm's publicly disclosed largest customers, which include Apple Inc, Samsung Electronics Co Ltd and Chinese smartphone makers Oppo and Vivo.

ZTE's troubles with the US government are also playing out amid broader fears of an ascendant Chinese tech industry. ZTE provides services for 100 million users in India, 300 million users in Indonesia, and 29 million users in Italy, the official said.

The official said the recent ban was a grossly disproportionate penalty that ignored the strides ZTE had made towards complying with United States laws.