ZTE's business comes to a grinding halt after the US ban

It's hard to get things done when the government stops you from getting parts from US companies for seven years.

Alfred Ng Senior Reporter / CNET News
Alfred Ng was a senior reporter for CNET News. He was raised in Brooklyn and previously worked on the New York Daily News's social media and breaking news teams.
Alfred Ng
2 min read

One of ZTE's phones.

Josh Miller/CNET

The US government's export ban on ZTE has effectively brought the Chinese telecom giant and phone maker to its knees. 

In a Hong Kong Exchanges filing on Wednesday, ZTE told investors that the "major operating activities of the company have ceased" because of the US Commerce Department's export ban. In April, US officials said they were imposing a "denial of export privileges" against ZTE, which means US companies can't sell products and services to the Chinese company. 

The ban, which lasts for seven years, followed the government's determination that ZTE violated terms of a 2017 settlement by failing to fire employees involved with illegally shipping US equipment to Iran and North Korea.

In Wednesday's filing, ZTE said it's actively communicating with US officials in an attempt to reverse the ban, or at least lighten it. The Chinese government has also reportedly been involved with the negotiations. 

In a statement, the Department of Commerce said ZTE doesn't have administrative appeal rights under the Export Administration Regulations. But the department's Bureau of Industry and Security "is exercising its discretion to grant ZTE the opportunity to present additional evidence through informal procedures and will give this information prompt consideration."

ZTE is still functioning, the company said, because it "maintains sufficient cash and strictly adheres to its commercial obligations," but it is struggling to push ahead and launch or sell new products because of the ban. 

This isn't the only Chinese phone company in hot water with the US government. Federal officials publicly warned earlier this year against using Chinese phone giant Huawei's devices due to spying and security risks for US telecommunications infrastructure.

ZTE said will announce any developments related to its banned status as soon as it is "practicable." 

First published May 9 at 8:50 a.m. PT.
Update at 1:30 p.m. PT: Adds statement from the Department of Commerce.

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