Updated 4/18/18 – Things just got even worse for ZTE. According to someone familiar with the matter at hand, ZTE's access to using Android on its mobile devices may be revoked. Alphabet is reportedly in talks with ZTE about the impact of the ban that was announced on Monday, and while a decision on this front hasn't been met yet, this isn't a good position for ZTE to be in.
The United States government has been heavily targeting China-based technology companies throughout all of 2018, and the latest move from the Department of Commerce is a particularly large blow against ZTE. On April 16, Secretary of Commerce Wilbur L. Ross, Jr. issued a Denial Order against the company that essentially kills its smartphone business in the U.S.
Per the order –
[ZTE] may not, directly or indirectly, participate in any way in any transaction involving any commodity, software or technology exported or to be exported from the United States.
According to the Ross, Jr., the order is being issued in response to ZTE illegally sending telecommunications equipment to North Korea and Iran. ZTE agreed to a criminal and civil fine of $1.19 billion in 2017, and in addition to this, said it would fire four of its executives and either reprimand or cut back bonuses of 35 other workers. ZTE did fire the four execs, but it failed to institute any punishment for those 35 employees.
ZTE made false statements to the U.S. Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation.
Going back to the Denial Order itself, this has the potential for huge repercussions against ZTE. For starters, it prevents the ZTE from buying hardware components from companies like Qualcomm and Intel. Secondly, and perhaps even more damning, also makes it impossible for Google to license any of Android's apps/services to ZTE.
Shortly after the order was issued, the National Cyber Security Centre also reached out to the United Kingdom's telecom entities saying that using any services or equipment provided by ZTE would be a national security risk.
Per Dr. Ian Levy, the Centre's technical director –
It is entirely appropriate and part of NCSC's duty to highlight potential risks to the UK's national security and provide advice based on our technical expertise. NCSC assess that the national security risks arising from the use of ZTE equipment or services within the context of the existing UK telecommunications infrastructure cannot be mitigated
Where in the world does ZTE go from here? The company may still have a chance at redeeming itself in the UK, but as far as the U.S. goes, that's a much different story. A ban of this magnitude is effectively a death sentence for ZTE's US smartphone operations, so this could very well be an end of an era.
No matter where you live in the world, what's your take on all this?
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