ZTE replaces its CEO and other top execs

ZTE replaces its CEO and other top execs

A number of top executives are out at ZTE as the phone maker works to fulfill the requirements of U.S.-imposed restrictions. Among the big changes up top is new CEO Xu Ziyang, who formerly headed up the company’s operations in Germany. A new CFO, CTO and head of HR have been named, as well, according to The Wall Street Journal.

The move comes a few days after company slowly began to resume some business operations on a one-month waver, following a seemingly D.O.A. seven-year export ban. The ban was announced back in April, after the company failed to appropriately punish top employees over Iran/North Korean trade violations.

Trump, however, was quick to toss the company a lifeline, citing potential job loss in China. The President’s willingness to bail out ZTE has been met with staunch criticism by many, including members of his own party. A bipartisan push in Congress to reinstitute the ban began in Congress last month. Many of the issues appear to stem from ties to the Chinese government that also put Huawei in hot water with U.S. security orgs.

For now, however, the company appears to be springing back to life, as it rushes to comply with the most recent laundry list of restrictions. The moves come in the wake of a $1 billion fine and the effective freeze on operations as the company mulled a way forward without relying on products from U.S. businesses like Google and Qualcomm.

In that time, ZTE has lost billions, and grappled with other…inconveniences. Of course, even with these changes, the company isn’t out of the woods just yet. In addition to on-going financial issues, security and other concerns could be enough to put consumers in the U.S. and other countries off the company altogether.

Source: Mobile – Techcruch

House committee accepts amendment to uphold ZTE ban

House committee accepts amendment to uphold ZTE ban

The bizarre recent tale of ZTE is getting another wrinkle. Earlier today, a bipartisan House Appropriations Committee unanimously voted to accept an amendment to uphold sanctions against the company.

The amendment to the 2019 Commerce, Justice, and Science Appropriations bill is, of course, being viewed as a rebuke of the president, whose tweets over the weekend appeared to suggest a softening on the seven-year ban imposed by the Department of Commerce last month.

In fact, the amendment’s author, Rep. Dutch Ruppersberger of Maryland, called out Trump by name on social media, adding in a press release tied to the news, “This amendment, which passed with the unanimous support of my colleagues on both sides of the aisle, shows that, when the United States enacts sanctions, we stand behind them.”

Perhaps unsurprisingly, the release name checks not just the sanctions violations that led to the export ban, but also claims of spying that have put the company in the crosshairs of U.S. intelligence agencies. It’s a complicated series of events that I went into a bit more detail over here.

Trump, meanwhile, surprised the world by suggesting that he was working with the Chinese president to help ZTE find a way around the seven-year ban that has threatened to wipe the company off the map. The president cited job losses in China as his major motivator. That statement was met with bipartisan disapproval and Trump appeared to walk it back yesterday in another tweet, accusing The Washington Post and CNN of writing “false stories.”

It’s clear, however, that ZTE is being viewed as an important stumbling block as trade tensions increase between the two superpowers. The bill carrying the new amendment will come under consideration by the House of Representatives next month. 

Source: Mobile – Techcruch

How ZTE became the focal point of US/China relations

How ZTE became the focal point of US/China relations

Here in the States, ZTE has been content with a kind of quiet success. The Chinese smartphone maker has landed in the top five quarter after quarter (sometimes breaking the top three, according to some analysts), behind household names like Apple, Samsung and LG. Suddenly, however, the company is on everyone’s lips, from cable news to the president’s Twitter account.

It’s the kind of publicity money can’t buy — but it’s happening for one of the worst reasons imaginable. ZTE suddenly finds itself in the eye of a looming trade war between superpowers. Iranian sanctions were violated, fines levied and seven-year international bans were instated.

It’s like a story ripped from the pages of some Cold War thriller, though instead of Jason Bourne, it’s that one budget smartphone company that you’ve maybe heard of, who maybe makes that weird Android phone with two screens.

So, how did we get here?

ZTE began U.S. operations in 1998, a little over a decade after forming in Shenzhen (and a year after going public in China) as Zhongxing Semiconductor Co., Ltd. The change of name to Zhongxing Telecommunications Equipment reflects the newfound focus for the company, which employees around 75,000 and operates in 160 countries.

While ZTE has flirted with premium and sometimes bizarre devices, in the smartphone world, the company is primarily known for its budget hardware. It’s no coincidence that the company was tapped by google to be the first to run Android Oreo Go Edition (nee Android Go). The manufacturer has found particular success in the developing world, while making significant gains in the U.S. by releasing dozens of low-cost devices targeted at prepaid users.

In recent years, however, the company has come under increased scrutiny on two fronts. First, there’s the issue of the company’s perceived ties to the Chinese government. It’s the same thing that’s tripped up fellow Chinese handset manufacturer Huawei in its pursuit of the U.S. market.

In Huawei’s case, multiple warnings from top U.S. security agencies has severely hobbled any chance of making significant headway in this country. The company kicked off the year with the one-two punch of having AT&T pull out of a deal last minute, only to have Best Buy stop restocking its product on store shelves. ZTE, on the other hand, has run into less headwind there.

In February, top officials at the FBI, CIA and NSA all warned against buying product from both companies over remote surveillance concerns and later ending their sale at military bases. But after making significant inroads through non-contract carriers like Boost, Cricket and Metro PCS, the warnings appear to have had little impact on the company.

The same, however, can’t be said of a seven-year ban.

In 2016, the U.S. Commerce Department found the company guilty of violating U.S. sanctions. The department disclosed internal documents from the company naming “ongoing projects in all five major embargoed countries — Iran, Sudan, North Korea, Syria and Cuba.” That’s a big issue when selling a product that contains, by some estimates, a quarter of components created by U.S. companies — not to mention all of the Google software.

The following year, the company pleaded guilt and agreed to a $1.19 billion fine, along with the stipulation that it would punish senior management for the transgression. Last month, however, the DOC said ZTE failed to live up to the latter part of the deal, issuing an even steeper fine as a result.

“ZTE misled the Department of Commerce,” the department said in a statement to TechCrunch at the time. “Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behavior cannot be ignored.”

The new punishment bans U.S. component manufacturers from selling to ZTE for seven years. A few days later, the company told TechCrunch that the export ban would “severely impact” its chances of survival. And then, last week, the company ceased major operating activities.

“As a result of the Denial Order, the major operating activities of the company have ceased,” it wrote in an exchange filing. “As of now, the company maintains sufficient cash and strictly adheres to its commercial obligations subject in compliance with laws and regulations.”

In the meantime, the company was reportedly meeting with companies like Google in hopes of figuring out a workaround, while China was said to be meeting with U.S. officials to discuss the steep ban. For some, the ZTE ban was seen as a political move amidst a potential trade war, and a major roadblock toward negotiations.

That leads us to Sunday, when Trump tweeted, “President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!”

Job loss in China seems like an odd motivator for any U.S. president, let along Trump, but things make significantly more sense when you consider the sheer size of a company like ZTE. If a U.S. trade ban caused the company to fold, it’s easy to see how that could severely impact already tenuous relations between the two countries.

“The Chinese have suggested that ZTE was a show-stopper,” international studies expert Scott Kennedy succinctly told NPR, “if you kill this company, we’re not going to be able to cooperate with you on anything.”

And that brings us to this morning — and other Trump tweet. “The Washington Post and CNN have typically written false stories about our trade negotiations with China,” Trump writes. “Nothing has happened with ZTE except as it pertains to the larger trade deal. Our country has been losing hundreds of billions of dollars a year with China[…]…haven’t even started yet! The U.S. has very little to give, because it has given so much over the years. China has much to give!”

Those tweets, it should be noted, were most likely posted in reaction to bipartisan concern about Trump’s focus. “#China intends to dominate the key industries of the 21st Century not through out innovating us, but by stealing our intellectual property & exploiting our open economy while keeping their own closed,” Marco Rubio tweeted earlier this week. “Why are we helping them achieve this by making a terrible deal on ZTE?”

So things are weird. And it’s 2018, so expect that it will only get weirder from here.

Source: Mobile – Techcruch

China said to be discussing ZTE ban with U.S. officials

China said to be discussing ZTE ban with U.S. officials

The Chinese government is reportedly going to bat for ZTE over a seven-year ban that would have broad ranging consequences for the phone maker. According to a new report from Reuters, the subject was broached during a meeting with between senior Chinese and U.S. officials in Beijing this week.

The ban imposed by the Department of Commerce is the result of a violation against U.S. Iranian sanctions. ZTE pled guilty, agreeing to pay a fine and penalize employees. After the DOC insisted it failed to do the latter, it barred US companies from selling software or components to the phone maker for seven years. Between chip makers like Qualcomm and software providers including, most notably, Google, the restrictions will prove next to impossible for ZTE to circumvent.

For many, the steep penalty appears to be part of a larger looming trade war between the two countries that’s also found ZTE and Huawei caught in the crosshairs over ties to the Chinese government. U.S. officials, however, have insisted that the ban isn’t related to trade issues between the two countries.

Earlier this week, the Pentagon banned the sale of both companies’ phones on military bases — just the latest in a long line tough breaks here in the States.  ZTE has largely weathered the broader U.S. spying concerns better, due in part to a broader footprint in the States than Huawei, but the company admitted that this latest ban would be downright devestating. 

“The Denial Order will not only severely impact the survival and development of ZTE,” the company told TechCrunch, “but will also cause damages to all partners of ZTE including a large number of U.S. companies.”

ZTE has also reportedly been in talks with U.S. companies like Google and has suggested it will take judicial action, if necessary. 

Source: Mobile – Techcruch

ZTE says export ban will ‘severely impact’ its survival

ZTE says export ban will ‘severely impact’ its survival

It’s been a hell of a week for ZTE. News Monday that it was being hit with a seven-year export ban sent the company scrambling. The Chinese handset maker suspended its earnings report and reportedly sent its lawyers to meet with Google to see if anything could be worked out about a punishment that could hamper its ability to utilize Android and various key services.

Four days after we first reached out, ZTE has finally offered us an official reaction to the news. And it’s a doozy. The six-paragraph official statement from corporate mulls over the punishment and reasserts ZTE’s compliance to international law, which it “regard[s] as the foundation and bottom-line of the company’s operation.”

ZTE adds that it invested “over $50 million in its export control compliance program and is planning to invest more resources in 2018.” So, why did the company get dinged by the U.S. Department of Commerce for failure to significantly reprimand staff after pleading guilty to violating sanctions on Iran and North Korea?

The company contends that the U.S. Bureau of Industry and Security “ignored” its “diligent work” and progress it has made in complying with the law, calling the punishment, “unfair.” Seven years is certainly severe, given that U.S.-based companies make north of a quarter of the components used in the company’s handsets, according to estimates.

That, coupled with U.S.-based software makers, Google included, put the company in an extremely tight spot moving forward, and will likely require a complete rethink of ZTE’s business model, if upheld.

“The Denial Order will not only severely impact the survival and development of ZTE,” the company says, “but will also cause damages to all partners of ZTE including a large number of U.S. companies.” ZTE adds that it will continue to fight the ruling, taking “judicial measures,” if necessary.

The punishment comes as ZTE finds itself targeted by the U.S. government over spying charges, alongside fellow Chinese handset maker, Huawei.

 

Source: Mobile – Techcruch

ZTE said to be meeting with Google over US export ban

ZTE said to be meeting with Google over US export ban

Yesterday was a rough one for ZTE. A year after pleading guilty to violating sanctions with Iran and North Korea, the U.S. Department of Commerce brought the hammer down and announced a seven-year export restriction on goods sporting U.S. components.

That applies to more than a quarter of the components used in the company’s telecom equipment and mobile devices, according to estimates, including some big names like Qualcomm. The list may well also include Google licenses, a core part of the company’s Android handsets. According to a Bloomberg unnamed source, ZTE is evaluating its mobile operating system options as its lawyers meet with Google officials.

Many of the internal components can be replaced by non-U.S. companies. ZTE can likely lean more heavily on fellow Chinese manufacturers to provide more of the product’s internals, but it’s hard to see precisely where it goes from here with regard to an operating system. There’s an extremely small smattering of alternatives open to the company, but none are great. Each would essentially involve the company working to build things, including app selections, from the ground up — and likely play a much more central role in the OS’s development.

As for Google’s role in all of this, ZTE certainly isn’t make or break for Android’s fortunes. Still, it’s a pretty sizable presence. As of late last year, it commanded 12.2 percent of U.S. market share, putting it in fourth place behind Apple, Samsung and LG. It’s certainly in Google’s best interest to maintain as many prominent hardware partners as possible — though, not if it comes with the added risk of upsetting the DOC in the process.

Source: Mobile – Techcruch

FCC wants to stop spending on gear from companies that ‘pose a national security threat’

FCC wants to stop spending on gear from companies that ‘pose a national security threat’
The U.S. maneuvers against China’s tech giants continue today with an official announcement from FCC Chairman Ajit Pai that the agency may soon ban purchasing anything from companies that “pose a national security threat.” Huawei, ZTE and other major tech manufacturers aren’t named specifically, but it’s clear what is meant.
Pai lists the risk of backdoored routers, switches and other telecoms equipment as the primary threat; Huawei and ZTE have been accused of doing this for years, though hard evidence has been scarce.
The proposal would prohibit any money from the FCC’s $8.5 billion Universal Service Fund, used for all kinds of projects and grants, to be spent on companies beholden to “hostile governments.” Pai mentioned the two Chinese giants in a previous letter describing the proposed plan.
Both companies in question have strenuously denied the charges; perhaps most publicly by Richard Yu, CEO of the company’s consumer business group, at CES this year.
But warnings from U.S. intelligence services have been ongoing since 2012, and Congress is considering banning Huawei equipment from use by government entities, saying the company “is effectively an arm of the Chinese government.”
Strong ties between these major companies and the Chinese government are hard to deny, of course, given China’s particularly hands-on methods in this sort of thing. Ironically, however, it seems that our spy agencies are so sure about this in great part because they themselves have pushed for and occasionally accomplished the same compromises of network infrastructure. If they’ve done it, they can be sure their Chinese rivals have.
The specifics of the rule are unknown, but even a relatively lax ban would likely be a big hit to Huawei and ZTE, which so far have failed to make a dent in the U.S. phone market but still manufacture all kinds of other telecommunications gear making up our infrastructure.
The draft of the new rule will be published tomorrow; the other commissioners have it now and are no doubt reading and forming their own opinions on how to improve it. The vote is set for April 17.

Source: Gadgets – techcrunch

Rating the big smartphone makers at MWC 2018

Rating the big smartphone makers at MWC 2018
 With that in mind, this seems like the perfect opportunity to take a good look at how the industry’s big names fared at the show. Barring any sort of unforeseen circumstances, here’s a list of this week’s biggest winners and losers. HMD (Nokia): HMD scored a coup for a second year in a row, led by another nod to Nokia’s former successes. This time out, it was a return… Read More

Source: Mobile – Techcruch