ZTE suspends smartphone sales, after-sale services to comply with U.S. ban

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ZTE, a major supplier of telecoms networks and smartphones based in southern China, earlier said the ban threatened its existence by choking off access to us suppliers of key technology and components like microchips.

It asked the U.S. to note its "high concern for the ZTE Corporation case, listen to ZTE's complaints seriously, and consider the company's progress in compliance construction and efforts to announce the adjustment of export injunction orders".

The news came just a day after Oclaro officially announced its suspension of shipments to the company.

Taiwanese semiconductor company Mediatek (2454.TW) said last week it had received a permit from the Taiwanese government to continue to supply ZTE.

The firm's fate has added a new source of tension to trade talks between the two countries after Chinese officials raised objections to the USA ban during negotiations with their American counterparts in Beijing last week.

The company said on Wednesday that it's "actively communicating" with the USA for a reversal of the import ban, which was enforced after the firm broke an agreement with the U.S. after it was busted for breaking United Nations sanctions on sales to North Korea and Iran.

The company said on Sunday it had submitted a request to the United States commerce department for a stay of the export ban, along with supplemental information. Though ZTE's employees are still reporting to work, the company is at a standstill as it seeks to have the export ban modified or repealed. Acacia shares are down greater than 30% for the reason that USA authorities banned ZTE from shopping for.

Last year, ZTE admitted it shipped US-made parts to Iran and North Korea despite trade restrictions. Today's announcement gives quite a bit of credence to that statement; it looks like the ban could possibly be a deathblow for ZTE.

ZTE buys chips from Qualcomm, Intel and Broadcom, and optical component parts from Maynard, Acacia, Oclaro and Lumentum, among others, according to Jefferies analyst Edison Lee. The company's false statements were reported to the usa government after the Bureau of Industry and Security requested documentation showing proof that employee discipline had occurred. There may or may not be some horse trading between their respective regulators or China may instead retaliate by banning a United States company from doing business in China.

As a result of the corporate is so vital to Beijing's tech ambitions, Lee believes the Chinese language authorities will "do its greatest" to assist ZTE resolve its dispute with the US.

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