ZTE, the Chinese smartphone maker slapped with a seven-year US sales ban over claims that it broke an agreement with the Department of Commerce over sanctions busting, has suspended operations.
That came on top of a Taiwanese order requiring sales of parts to ZTE to obtain export licences to prevent parts from being used in the development of weapons systems, the country's Bureau of Foreign Trade claimed.
According to investment banks in China, the company only had around one month's stock of key parts on hand when the suspension was abruptly implemented.
"The major operating activities of the company have ceased," the company announced (PDF) in an announcement to stock market traders in Hong Kong yesterday.
ZTE, which employs 75,000 staff and recently ranked as the fourth most popular smartphone maker in the US, noted that it maintains "sufficient cash" to keep its commercial operations up and running for the time being, but the company has already suspended its online stores - now showing as "under construction."
And according to a report in The New York Times, manufacturing has been halted at ZTE's plant in Shenzhen, with workers at the company's HQ telling the newspaper that they have been attending training sessions, napping or hanging out in their dormitories.
The company said on Wednesday that it's "actively communicating" with the US for a reversal of the import ban, which was enforced after the firm broke an agreement with the US after it was busted for breaking United Nations sanctions on sales to North Korea and Iran.
ZTE settled the breach by handing over $900 million, but violated the settlement after it failed to make good on its promise to dismiss four members of senior staff responsible for the sanctions-busting sales and discipline 35 more over the sanctions-busting.
"Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behaviour cannot be ignored," Wilbur Ross, the US secretary of commerce, said last month.
It's hard to imagine that the Trump administration - which just last week banned Huawei and ZTE devices from military bases in the US - will change its mind, given the US government's long-standing belief that Chinese tech firms pose a threat to national security.
And it's unlikely that ZTE will be able to recover from the ban either as, according to Reuters, US manufacturers provide up to one-third of the components used in ZTE's network equipment and smartphones.
US chipmaker Qualcomm, for example, provides the innards for more than half of ZTE's phones shipped globally and almost all of its phones in the US, according to Counterpoint, and it's thought the seven-year-ban has also cost the Chinese company its Android licence.
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