US ban forces ZTE to close its main operations

ZTE building logo

ZTE's fall from grace has been fairly spectacular. Now -- just weeks after been blacklisted by both the US and the UK -- the Chinese telecom manufacturer has announced that it has ceased its "major operating activities".

The company blames the move directly on the US ban on sales to ZTE, but says it is talking to the US government to try to get the ban lifted. Without a supply of US-made components, ZTE is going to find it very difficult to operate for very long.

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The US placed a ban on American companies exporting goods to ZTE after the Chinese firm violated previous sanctions. With a seven-year ban currently in place, ZTE is desperate to come to an arrangement that will enable it to continue to operate as normal -- for now, though, this will be impossible.

In an announcement issued to stock market traders in Hong Kong, ZTE says:

As disclosed in the announcement of the Company dated 20 April 2018, BIS has issued an order for the activation of a denial order (the "Denial Order"). As a result of the Denial Order, the major operating activities of the Company have ceased.

The statement goes on to say:

As of now, the Company maintains sufficient cash and strictly adheres to its commercial obligations subject to compliance with laws and regulations.

ZTE also says that it is "actively communicating with the relevant US government departments" to try to get the Denial Order lifted and "forge a positive outcome in the development of the matters".

As noted by Reuters, analysts have suggested that ZTE will find it very difficult to remain competitive if it fails to find non-American suppliers, or if it does not manage to get the ban lifted.

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