China’s ZTE Corporation blasted the U.S. government’s decision to carry out a 7-year ban of its purchase of crucial American components, calling the move “extremely unfair” and “unacceptable” and so that threatens its survival.
Just this week, the United States imposed a ban on sales by American companies to ZTE for 7 years, saying the Chinese company had broken a settlement agreement with repeated false statements.
With that, it threatens to cut off its supply chain and that would deal a crippling blow to ZTE and its aspirations to expand worldwide.
In turn, the Shenzen-based communications-equipment maker vowed to protect its rights by legal means without specifying what actions it may take. It also vowed to keep on resolving the issue through negotiations with the U.S. government.
“It is unacceptable that BIS insists on unfairly imposing the most severe penalty on ZTE even before the completion of the investigation of facts,” ZTE said in its first response since the ban was announced.
“The denial order not only severely put the survival of ZTE in danger, it also hurts the interests of all the partners of ZTE, including a large number of American companies,” added ZTE.
Trade War Effect
The ban is adding to rising tensions between China and the U.S. over trade. Basically, it has ignited tensions between the two countries at a time when they’ve already threatened each other with tens of billions of dollars in tariffs, fanning worries of a full-blown war.
In response to the ZTE ban, China’s Ministry of Commerce said twice this week that it would take necessary measures to protect the interests of its companies.
“The action has given way to widespread market concern on the U.S. trade and investment environment,” a spokesman said.
ZTE relies on suppliers from chipmakers Qualcomm Inc. and Micron Technology Inc. to optical developers Lumentum Holdings Inc. and Acacia Communications Inc.
The ban may possibly stop the company from using Google’s Android operating system as well, the heart of its smartphones.
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