The decision of the Department of Commerce to hit ZTE with the hardest sanctions to date over the company's illegal imports to Iran prompted a wave of patriotism among China's population which is largely sympathetic to the firm's troubles in the United States, Reuters reports. Social media in the Far Eastern country is presently overrun with messages of support for ZTE, with many claiming the firm is being unfairly punished for being a successful Chinese business. Calls for increased investments in China's semiconductor industry have also been prompted following the latest development, indicating that ZTE wouldn't be in this situation if it wasn't as reliant on imports from the U.S. as it currently is. Chinese firms are presently importing some $11 billion worth of semiconductor technologies from the U.S. on an annual basis, according to recent estimates.
Washington forbade American companies from supplying both hardware and software to ZTE over the next seven years, with the majority of the firm's partners such as Google and Qualcomm presently waiting for a federal clarification on the matter. Taken at face value, the order will effectively kill ZTE's smartphone business in the U.S. where it's currently the fourth largest handset manufacturer and will also be largely detrimental to its global operations given how it also spans software licensing, meaning ZTE may not even be able to use any contemporary version of Android for the time being. UK authorities are simultaneously warning British wireless carriers against using ZTE's equipment, citing national security concerns and delivering yet another blow to the company's international ambitions.
ZTE is currently estimated to be the world's seventh largest maker of smartphones which shipped north of 45 million devices in 2017 alone, according to several industry trackers. The new U.S. blow is a result of ZTE's business practices that previously saw it break U.S. trade sanctions and conspire to import American products into Iran, a transgression which it admitted a year ago, agreeing to settle with an $890 million fine and a promise to lay off four executives and discipline 35 other workers, either by reprimanding them or withholding their bonuses. The latter part of the settlement was never carried out, with the Commerce Department accusing ZTE of misleading and lying to it over the matter before hitting it with the newest sanction. The development is further deteriorating the relations between Washington and Beijing that appear to be close to a full-fledged trade war following President Trump's recent push for new import tariffs on various goods and the newly reinvigorated tensions between the stateside government and Huawei.