ZTE’s global smartphone sales likely to slump more than half because of US export ban
Phone sales hammered even though company takes steps to get US ban lifted
ZTE Corp, the Chinese telecoms maker embroiled in an export ban row with the US, estimated that its global smartphone sales this year may not even reach half of what it achieved in 2017.
“Even if the US lifts the export ban immediately, the company has estimated that smartphone sales this year may not even reach 50 per cent of the number achieved in 2017,” said a person familiar with the situation who asked not to be named as the information is private.
ZTE has paid an additional US$1 billion in fines to the US Department of Commerce and is in the process of putting US$400 million into an escrow account, in an effort to meet the conditions of a US settlement deal to lift the ban and get back into business fast. The White House-brokered agreement also requires the company to replace its board and terminate all executives ranked above senior vice-president as well as anyone else involved in the Iran violations.
The Shenzhen-based company closed “major operating activities” in April after the US banned American technology companies from supplying it with components, after ZTE failed to discipline employees involved in a previous violation of US prohibitions against selling equipment to Iran. The ban plunged the company into disarray, with Chairman Yin Yimin saying at the time it was in a “state of shock”.
ZTE’s fate is now at the mercy of a US political tug of war, after both Republican and Democrat senators voted by 85 to 10 to add language to a defence bill that would repeal President Donald Trump’s agreement to end the ban on US exports.
ZTE derived 59 per cent of its revenue last year from its carrier network business, which includes switching and access systems, optical and data communications and wireless communication systems. Another 32 per cent of its revenue came from its consumer business, mostly from smartphone and tablet sales, and the remaining 9 per cent from government and corporate business, according to data compiled by Bloomberg.
ZTE did not immediately reply to a request for comment. The company does not release smartphone sales figures in its annual reports or other official publications.
