ZTE may get a lifeline. The U.S. and China are working on a deal that would remove the Trump administration’s ban preventing U.S. companies from selling components and software to ZTE. In exchange, China will lift tariffs that it recently put on products from the U.S. farm belt and speed up its review of deals involving U.S. tech companies, according to The Wall Street Journal, which cited unnamed sources.
ZTE also may have to make some big changes to its management and board and possibly pay some fines, according to the WSJ report.
The Trump administration initiated a seven-year ban on U.S. companies from selling components to ZTE after the U.S. Commerce Department found that ZTE had failed to comply with the terms of U.S. trade sanctions by selling telecom gear to Iran and North Korea.
That ban sent the Chinese company into a downward spiral and in early May it announced that it had stopped all “major operating activities” in its Shenzhen, China, factory.
In an interview with CNBC yesterday, U.S. Treasury Secretary Steven Mnuchin said that the intent of the ban was not to put ZTE out of business and that the government was working to resolve the problem.
ZTE relies on suppliers like Qualcomm and other U.S. companies for several key components. But the ban has prompted South Korea’s Samsung to see if it could benefit from the situation. According to CNBC, Samsung is talking with ZTE about supplying mobile processor chips from its flagship Exynos line to ZTE. The Exynos chips currently power Samsung’s Galaxy line of smartphones.