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ZTE Banned from Buying US Components for the Next Seven Years

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It was a tough day for ZTE as a ban was made by the US Department of Commerce. The US government agency announced a seven-year ban against the sale of goods sporting U.S. components to the Chinese manufacturer.

The reason behind this ban is because of the company's violation of terms on the sanctions case it has since been facing since 2016, when it was accused of dodging US sanctions on Iran. It was discovered that the Chinese company was selling US technology to Iran through the use of several shell companies. After this discovery, the US Department of Commerce threatened to shut off ZTE from its US supply chain partners, including Qualcomm and Google licenses. The Chinese company, however, was able to avoid this by paying almost a fine of up to a billion dollars.

A year after ZTE was accused of such, the company pleaded guilty to violating these sanctions with Iran and North Korea. Ever since then, the company promised to fire four senior employees and put a disciplinary action on 35 others. Unfortunately, it was discovered that ZTE had not kept up with its end of the agreement as the 35 other employees had not received any disciplinary action or reduced bonuses.

With the ban in place, ZTE will definitely have limited options for its components; especially since Qualcomm is part of that ban. It's also very likely that the upcoming ZTE Axon 7 won't be getting a successor; unless the company decides to use MediaTek chips.

For now, the ban does not affect ZTE's sale on smartphones in the US so it's still possible to get your hands on one of these phones. But for sure, ZTE will be affected by this ban once Google will be included in it.

According to Reuters, Alphabet (Google's parent company) and ZTE are both still undecided on whether or not the latter will be able to use the Android operating system. Considering Android is an open source software, it's hard to put a limit on who can use it. If ZTE's GMS license (Mobile Application Distribution Agreement, or MADA) gets pulled, it could mean that ZTE may have no choice but to limit its smartphone business to China.


Source: AndroidPolice, AndroidPolice

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31 comments:

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  1. ZTE would have to build their own version of Android without GMS. And replace Qualcomm parts. It’s a big deal.

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  2. FCC also wants to stop sending USF money to any carrier that uses ZTE or Huawei network gear. Small regional carriers. They have competitive alternatives but will probably have to pay more.

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  3. ZTE has written off its US business. Fired virtually all employees in its US HQ. Good luck with warranties and resale values.

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    1. That was Huawei, ZTE will almost surely do the same but AFAIK they haven't yet.

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    2. Sure because they held their value so well yesterday)

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  4. China adopting YuanDollar. See if the technology departs from Google too.

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  5. Perhaps this is the reason we don’t see deals anymore in prepaid phones. With Huawei and ZTE badly wounded from us “sanctions”, who’s left selling them? Samsung and LG. Why lower prices if you have no competitors?

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    1. For sure the USA consumer will suffer. Hope Lenovo/Moto hangs in there.

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    2. I doubt Moto will sell low end phones. We will definitely see more Alcatel fill more low end spots. I personally would like to see Huawei in the US to compete in the high end market against Samsung and Apple.

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    3. US consumers won’t ‘suffer’ at all. There are plenty of competitors like Moto, Alcatel, BLU, Nokia that will step up. The only ones that will suffer are ZTE and Huawei. They deserve it. ZTE employees who sold gear to N Korea and Iran were rewarded with bonuses after ZTE agreed to punish them! That’s all we need to know.

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    4. ZTE knew exactly what they were doing, hope they suffer for it.

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    5. There are plenty of deals, this is April, pretty much just like the last ones, and with the economy people can afford higher priced phones, I say good.

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    6. Less players in the market = higher prices for the consumer. Less incento for the other players to "step up".

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    7. Just because the options are (further) limited doesn't mean the customer base goes away or is suddenly able to afford the $600+ flagships. So whether it's Samsung, or LG, or Motorola, or Blu or whoever--they will have to keep coming up with something affordable. Now value (specs for $) may suffer, but the market will sustain.

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  6. ZTE et al. will prosper just fine w/o USA. USA is a mature to dimishing market for much of their products. Missing out on the upgrade to 5g in USA may hurt but in the end China (clone or not) tech. will rule majority of world markets. Nans like this justakes them stronger / more self sufficient in the long run picture.

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    1. ZTE will pay a big price around the world when they lose GMS and the Play Store. Creating their own Android fork and getting customers to accept it is not trivial. They may lose half their phone sales.

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    2. There are great alternatives to play store. Pirate China & other developing country low end users find a way already and don't care, this will just expand popularity & variety of "alternate means". Local phone modders will make a nice little living providing solutions to the unskilled, uninterested, too busy just want it to work crowd.

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    3. Alternatives to Play Store are not "great" and never will even be close.
      Ignorant, apathetic or nerd customers may buy phones without GMS, but this will hurt ZTE sales a lot.

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    4. The RoW will move away from GMS and moves like this just expand the speed / momentum / motivation of the informed, educated innovators. You head is in the sand and uniformed re what is going on outside USA, EU market.

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    5. Outside of Chinna there is no market for Android phones without Google Mobile Services. I don't see that changing anytime soon.

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    6. My prediction was right at and 6:12 and 7:55. The OP was wrong. ZTE just announced they are shutting down smartphone production worldwide.
      They can't make a viable product without access to Qualcomm, certain other chips and GMS.

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  7. All these sanctions on Chinese manufacturers would be fine if this country actually made tech we could buy instead, but it doesn't. As a result we have to import almost all of our tech. If not from China, than from somewhere else. The difference being that it will cost more without any benefit to US industry while the countries we still import from profit from the reduced competition in the US market. All we've done is transfer profit from some Chinese manufacturers to other foreign manufacturers at the expense of the American consumer.

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  8. What about people already using ZTE phones like the Axon 7? Will they lose access to the Google Play Store if the Axon 7 owners continue to use
    them into next year?

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  9. I guess I better hope that my piece of crap ZTE ZMAX Pro holds up for a little bit because the prices of phones are about to go up, up, up.

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    Replies
    1. "the prices of phones are about to go up, up, up."

      How would that help OEMs move units, when the buying power isn't necessarily improving much--especially in the demographic that currently buys these ZTE phones?

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  10. On a related note, what ever happened to Pantech phones?
    Zach

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    Replies
    1. Pantech was near bankruptcy and was bought by a liquidator who sold off their assets and shut the company down.

      Pantech Left with 3000 Patents Only in 2 Years after New Owner’s Takeover - BusinessKorea

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    2. Don't hear/see much re Kyocera these days but they seem to still be in the USA market? Still selling their Dura & Hydro lines?

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    3. Thanks Dennis, interesting article

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