US Ban Being Lifted Doesn't End Concerns About ZTE's Future

Even if President Trump is successful in his efforts to convince Capitol Hill to honor his provisional agreement with ZTE and allow the Chinese company to return to business in exchange for heavy concessions, the general concerns about the firm's future aren't going away, CNN reports, citing industry watchers. The firm has already said to have been abandoned by a number of potential and existing clients, with the damage to its brand also being immeasurable, especially in the context of the ultra-competitive entry-level and mid-range market segments.

ZTE was already ditched by Telstra and MTN in Australia, with both wireless carriers removing its devices from their product portfolios. One of its largest stateside partners, AT&T's Cricket Wireless, is now looking to other firms to address the demand for entry-level Android smartphones among its customers. ZTE's admitted violations of international trade sanctions imposed on North Korea and Iran already cost it $892 million last year but its inability to fully comply with the 2017 settlement will see it pay another $1.3 billion fine, provided the Congress doesn't attempt to intervene in President Trump's efforts to lift the firm's seven-year ban on purchasing components and licensing software from American companies. Combined with lost sales stemming from the ordeal, ZTE may lose as much as $3.1 billion this year as a result of the denial order issued by the Commerce Department six weeks back, according to previous reports

The estimated loss would account for roughly 17-percent of the firm's annual operating revenue and is likely to lead to further layoffs. ZTE presently employs around 75,000 people, mostly in its home country. While publicly traded on two stock exchanges, ZTE started as a state-owned firm and the People's Republic of China still has a majority stake in the company. The phone and telecom equipment maker previously said stateside regulators have been treating it unfairly, noting that its lack of compliance with the 2017 settlement was self-reported and unintentional, alleging the federal reaction to the development was hence too harsh.

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