Chinese smartphone maker ZTE halts operations over U.S. ban

By Sommer Brokaw  |  May 10, 2018 at 2:05 PM
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May 10 (UPI) -- Chinese smartphone maker ZTE has halted operations to resolve issues with a U.S. trade ban imposed last month that's cut into revenue.

The company announced it's ceased "major operating activities" in a filing late Wednesday, saying the U.S. ban has drained its supply chain.

ZTE told senior staff the next two weeks was a "critical window" for the company to resolve the issue, Bloomberg reported.

The Commerce Department's order bans ZTE from "access to goods, software and technology subject to U.S. export control jurisdiction" for seven years.

Officials said the order was based on ZTE making "false statements" about its compliance with a settlement on Iranian sanctions and illegal shipments to North Korea.

The company is China's second largest telecommunications firm and fourth largest seller of smartphones in the United States, officials said.

"ZTE is heavily reliant on U.S. products and software, and it will no longer be able to source such items," the order said. "As a result, ZTE may face significant limitations on its ability to continue bringing its products to market."

The Chinese tech giant said in its filing it will appeal to the U.S. government for "modification or reversal" of the order.

The decision to cease ZTE operations comes amid escalating conflict between the United States and Chinese manufacturers. Earlier this month, ZTE and Chinese cellphone maker Huawei were banned from sale on U.S. bases worldwide, with the Pentagon citing security risks with their devices.

Huawei and ZTE both denied their devices pose a security risk.

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