ZTE Asks America To Lift Component Supply Ban

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Chinese firm submits application to US department asking for ban on software and components to be lifted

Chinese telecommunications maker ZTE has formally requested that the United States lifts the seven year ban on US companies supplying it with software and components.

It comes after ZTE last month said the ban threatened the company’s survival.

The US had imposed the ban after it alleged the Chinese company had broken a settlement agreement with repeated false statements (regarding breaching US sanctions on Iran and North Korea), and the ban was punishment for violating the terms of the settlement agreement.

Formal application

The ban came amid growing trade frictions between the United States and China, and most Chinese observers believe the move is part of this political trade policy.

Matters came to a head in April when the US Commerce Department’s Bureau of Industry and Security (BIS) imposed a ban on sales by American companies to ZTE for seven years.

Following that move ZTE immediately suspended trading of its shares on Chinese stock markets and delayed an earnings release.

The move highlighted China’s heavy reliance on importing foreign semiconductors.

And now ZTE has according to Reuters submitted an application to the BIS for the suspension of a business ban. This was revealed in a filing to the Shenzhen stock exchange on Sunday.

ZTE’s exchange filing on Sunday apparently did not give details of its request or say when it had been made, but it did say that the company had provided additional material at the BIS’s request.

Last week it was reported that Chinese negotiators who were holding trade talks with US counterparts in Beijing, asked the United States to hear ZTE’s appeal, take into account the company’s efforts to improve its compliance, and amend the ban.

DBS Vickers analyst Tam Tsz-Wang told Reuters the ZTE request appeared to be procedural.

“(This) doesn’t make me turn all positive,” Tam told Reuters. “The outcome is more an issue that depends on the negotiation between US and China,” he added, declining to speculate.

Meanwhile ZTE’s Chairman, Yin Yimin, wrote in an internal letter dated 4 May that the company was “proactively taking actions under the guidance of the Chinese government, pushing for a resolution as soon as possible.”

“However long a road, it has an end. However long a night, it also has an end. Let’s be confident, hopeful, and welcome the light of dawn,” Yin added.

Western worries

The West has grown increasingly concerned about Chinese tech firms, and their impact on national security, over the past few years.

The UK’s national cyber-security agency for example recently warned telecoms companies not to use equipment or services from ZTE, saying to do so would harm British national security.

In 2012 the US House Intelligence Committee warned that both Huawei and ZTE posed a national security threat and recommended they were banned from the US.

Such warnings have been regularly repeated, and the US recently blocked the proposed takeover of Qualcomm by Broadcom on the grounds that it could boost Huawei’s influence over 5G standards.

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