Happy New Year, and let the job cuts in telecom equipment begin.
The company is suffering from troubles on two major fronts.
First, the Shenzhen, China-based company has the threat of supply sanctions hanging over its head. The U.S. Commerce Department is expected in February to impose a ban on exports by U.S. companies to ZTE. The ban comes as a result of ZTE allegedly breaking the department’s sanctions on sales to Iran.
ZTE gets about a third of its components from Qualcomm, Microsoft, and Intel, according to Reuters.
Secondly, the Chinese company is suffering from the same problems as other major telecom equipment vendors that are caught between a lag in sales for 4G equipment and the ramp-up to 5G.
Ericsson has cited the same problem in terms of the transition to 5G. The Swedish company is in the midst of a cost reduction plan aimed at saving the company more than $1.05 billion in expenses by year-end 2017. In 2016, it laid off more than 8,000 employees.
ZTE has the added stress of dealing with slumps in its handset sales.
Reuters reported ZTE chairman Zhao Xianming told employees during a New Year’s speech that the company “encountered its biggest crisis in its 31-year history.”