Chinese tech giant ZTE ceases operations after ban on using U.S. components

Considering how much of their sales were in the U.S., and knowing the kind of threats the U.S. government had already made to Huawei, it was pretty dumb of them to ignore U.S. government warnings and investigations over what must have been piddly sales by volume (though probably with quite a profit margin, since no one else was selling to Iran). Now it's totally blown up in their face.

I&#x27;m completely baffled by the US stance towards Iran. I understand they want to eliminate Israel, but given that they suffered US meddling of a democratic election, capitulated to the reduction of their nuclear program and inspections, and otherwise cooperative with US demands, what is the reason for continued sanctions? Is it due to the sheer inertia of legacy policies, the Israeli lobby?<p>I can understand if it&#x27;s the sheer inertia of legacy policies, since we managed to sanction Cuba for no good reason. The people that end up getting hurt from these policies set by average people thousands of miles away are just average citizens.

Chipmaking may go inhouse within national borders, but how many companies make Semiconductor Capital Equipment? That&#x27;s an even more concentrated industry than the chip industry itself. The top 10 companies in the industry represent 90% of the market share by revenue, and 9 out of 10 are based in the US or Japan. (1 is Dutch) The trend would dictate further export controls upstream.<p><a href="https:&#x2F;&#x2F;seekingalpha.com&#x2F;article&#x2F;4053221-top-10-semiconductor-equipment-companies-grew-14_1-percent-2016-will-repeat-2017" rel="nofollow">https:&#x2F;&#x2F;seekingalpha.com&#x2F;article&#x2F;4053221-top-10-semiconducto...</a>

Somebody help me understand: does the US really try to enforce its export controls not just on our own country, but on foreign countries? Many countries trade with Iran---do we really expect to keep all our goods from making it there by way of third-parties?

ZTE pretty much admitted the denial order is their end. From the denial order:<p><i>note that in its response to BIS &#x27;s notice of proposed activation of suspended sanctions and in making its case for leniency, ZTE acknowledged that it had submitted false statements, but argued that it would have been irrational for ZTE to knowingly or intentionally mislead the U.S. Government in light of the seriousness ofthe suspended sanctions. The heart ofits argument is the question, posed by the company in rhetorical fashion, asking &quot; why would ZTEC risk paying another $300 million suspended fine and placement on the denied parties list, which would effectively destroy the Company, to avoid sending out employee letters of reprimand and deducting portions of employee bonuses?&quot; ZTE argued that BIS should not act until the company completed an internal investigation so that ZTE could answer such questions.</i>

Combine this sort of thing with China&#x27;s increasingly aggressive military stance, and in the long term, maybe medium or short term, world trade is going to be completely reshaped.<p>Reliance on other countries now looks risky. If you manufacture in China, you&#x27;re crazy if you don&#x27;t have a backup plan for your operations being shut down as an outcome of government action on one side or the other.

Given that this is about Iran&#x2F;N. Korea sanctions, why does it get conflated with &quot;tech cold war&quot;?

Long term, this will backfire on the US.<p>China will probably just develop more stuff locally, further reducing US influence.

It’s a company created by the Chinese government. They’ll just create another one to replace it.

Semiconductor industry is a strategic industry.<p>Even if China is not isolated from the global trade the same way as Soviet Union once was, it must duplicate several industries if it want&#x27;s to act independently from the global order.

This is mostly going to be a restructuring. Chinese companies will continue to help (and according to me they should) Iran and North Korea. Now they are going to split US only and non-US entity.

I didn&#x27;t see it mentioned in the article - what is the cost to the US companies losing ZTE&#x27;s business?

I guess this has just become a relic:<p><a href="https:&#x2F;&#x2F;flic.kr&#x2F;p&#x2F;JS7QJd" rel="nofollow">https:&#x2F;&#x2F;flic.kr&#x2F;p&#x2F;JS7QJd</a><p>(ZTE Firefox Phone. Still works too, I powered it up the other weekend... Might have to put a SIM in it - I bet nobody&#x27;s targeting _that_ with zerodays...)

Curious if this will start a trend for more and more manufacturers to take as much in house as they can if they&#x27;re dependent on the US market for components. Huawei and Xiaomi are already getting rolling with it.

&gt; <i>According to the United States government, the company used an elaborate system to sell American-made goods there, and then lied and deleted emails when the Commerce Department began to investigate. It even made plans to resume shipments to Iran while the investigation was ongoing, according to the Commerce Department.</i><p>Unfortunately the truth doesn&#x27;t make good headlines like &quot;TRUMP STARTING TRADE WAR&quot;, but I think this best sums up what&#x27;s happening and why.

I wonder what the retaliation will be.

Should ban Apple in response. Would be hilarious

This will foment a lot of anger.<p>It does look to me that the US is really at its best here in applying the rule of law, and following the contract it had with ZTE to the letter.<p>But others will find it hard to believe, especially with Trump at the helm.

Why is the NY Times spinning this as a &quot;tech Cold War&quot;? ZTE got caught violating US sanctions against North Korean and Iran, and repeatedly lied to US officials about it.<p><a href="https:&#x2F;&#x2F;www.commerce.gov&#x2F;news&#x2F;press-releases&#x2F;2018&#x2F;04&#x2F;secretary-ross-announces-activation-zte-denial-order-response-repeated" rel="nofollow">https:&#x2F;&#x2F;www.commerce.gov&#x2F;news&#x2F;press-releases&#x2F;2018&#x2F;04&#x2F;secreta...</a>