ZTE Expects To Lose Over $1B In H1 2018 Due To U.S. Ban

ZTE believes it lost between $1 billion and $1.35 billion over the course of the first half of the year due to the U.S. Commerce Department's denial order from April, the company said as part of its latest preliminary financials published earlier today. The Chinese original equipment manufacturer attributed the majority of that deficit to the sanction that has now partially been lifted, though some stateside lawmakers are still looking into the possibility of reinstating the ban, which would effectively sentence the company to bankruptcy.

One report from late May indicated ZTE believes its clash with the Commerce Department will cost it over $3 billion once immediate losses are added with the long-term consequences of its damaged reputation that already saw it dropped by some clients. In total, the company may be looking at a hit amounting to some 20-percent of its 2017 turnover which becomes even more problematic with regards to the fact that ZTE is unlikely to repeat its last year's performance in the near future. The firm already paid a $1 billion fine due to its violation of a 2017 settlement over broken trade embargoes imposed by Washington on North Korea and Iran, in addition to making a $400 million eschew payment. Its near-term plan is to seek another $10 billion in funding so as to stabilize its operations as part of a move that may overleverage its business.

While publicly traded, ZTE is majority-controlled by a state company, with the tech giant possibly counting on Beijing to bail it out if its prospects continue deteriorating. The timing of the OEM's troubles with stateside regulators is also less than ideal for a timely resolution of those issues as the U.S. and China are presently in the middle of a full-blown trade war and while President Trump first moved to save ZTE as a sign of goodwill toward Beijing, doing so doesn't appear to be near the top of the priority list at the White House any longer. Under the original denial order, ZTE was prevented from purchasing and licensing American technologies over a seven-year period, which crippled its operations almost momentarily.

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