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ZTE on life support after U.S. export ban

ZTE on life support after U.S. export ban

"Major operating activities of the company have ceased" as a result of the USA decision, it said in a filing Wednesday.

The sanction relates to an investigation into ZTE's alleged sale of telecommunications equipment containing USA components to Iran in violation of U.S. sanctions imposed on the country. The firm pleaded guilty to the charges in March past year and was hit with $1.2 billion in fines. The Defense Department last month ordered military exchanges to end the sale of ZTE phones on USA bases.

A USA delegation travelled to Beijing last week to discuss the brewing trade conflict with their Chinese counterparts.

Earlier this year, the USA government banned American firms from sales to ZTE for seven years.

The suspension came amid worsening trade tensions between the US and China centered on technology-related intellectual property, though ZTE's case dates back to before President Donald Trump took office in January 2017.

The company, which is also the world's biggest telecommunications equipment manufacturer, would ditch Google's platform amid reports that it is under investigation by the USA for breaching sanctions against Iran, the South China Morning Post on Sunday. The company said it is working to have the ban modified or reversed.

The paper also noted that numerous USA firms utilize ZTE networking equipment.

The firm's products depended on American chips and other components and is unable to continue operating without key supplies.

Qualcomm last month said it expected lost sales to ZTE to lower its earnings by 3 cents per share in the current quarter.

ZTE did not immediately respond to a request for comment. ZTE had plans to become one of the first vendors in America to offer a smartphone connected to the next-generation wireless network known as 5G.

The ban also hurts ZTE's ability to provide services, such as repairs to infrastructure, to customers in other countries and regions in which it operates.

ZTE's failure to comply with the 2017 Commerce Department settlement included not reprimanding or cutting bonuses to 35 employees tied to the wrongdoing, and making false statements, the Commerce Department previously found.

"ZTE is undertaking a complete stock take of all units potentially impacted by the Denial Order", Digicel said.

Chinese Vice Premier Liu He is expected to resume trade talks with the Trump administration this week, after discussions in Beijing last week yielded no agreement on a long list of United States trade demands.

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