How The U.S. Export Ban Effectively Bankrupts China's Telecom Giant ZTE
ZTE as we know it is essentially dead .
On Monday, the U.S. Government imposed a 7-years ban on American companies from selling hardware and software to the Chinese telecommunications equipment maker.
ZTE is China’s second largest telecom vendor, after rival Huawei, and the 4th largest globally, selling network infrastructure (4G, wireless, servers, routers...) and Android smartphones to carriers worldwide (China Mobile, Deutsche Telekom, Softbank, Telefonica...).
For all of the types of equipment it makes, ZTE needs many critical hardware and software components made by U.S. firms including processors, memory, optics, antennas, screens, operating system or applications from the likes of Google, Intel, Micron, Qualcomm and many more.
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The U.S. export ban effectively stops the availability of all American technology to the 80,000 strong Chinese company , shutting down its factories and sales activities.
And it will take years - if it's even possible to so - for ZTE to redesign all of its products to find alternatives to U.S.-made components.
As a result, without any products to sell and missing the crucial 5G transition revolution, we expect ZTE, a publicly traded company on the Hong-Kong and Shenzhen Stock Exchanges, to file for bankruptcy in the next few weeks.
We also believe that many U.S. companies will be affected by the loss of sales to ZTE, including Qualcomm which provides chips for most of the Chinese company's smartphones.
Huawei could be the clear winner of ZTE's fall. However, the Shenzhen-based company is currently under the scrutiny of the U.S. Government amid national security worries and could well suffer the same fate as its home-based rival.
As reported earlier, Huawei is currently scaling back its activities in the U.S. and has started laying off American employees.
On a final note, every established or fast-rising Chinese technology company including Lenovo/Motorola, OnePlus, Oppo, TCL, Vivo, and Xiaomi should take notice of the U.S. decision and have plans in case such a tech ban is imposed against it.
On the other hand, the growth outlook of LG and Nokia in the U.S. as well as globally is suddenly looking much brighter.
Author: Jean Baptiste is a Vice-President and Principal Analyst at Atherton Research, a global technology intelligence firm helping clients deliver successful go-to-market strategies.
source: https://www.forbes.com/sites/jeanbaptiste/2018/04/17/how-the-u-s-export-ban-effectively-bankrupts-chinas-telecom-giant-zte
words and terms for reference
export ban: 出口禁令
ban from: prevent from
maker: 制造商
the likes of: 诸如……的；象……一样的
under the scrutiny of: 在……的审查之下
scale back: to make something smaller in size, amount etc than it used to be; 文中指华为收缩其在美的业务活动
on a final note: 相当于lastly, in conclusion，最后的
extensive learning materials for practice
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