ZTE, the fourth-largest smartphone company operating in the US, has declared it will “cease major operating activities,” effectively leaving its partners no choice but to pull their products from their shelves and to seek alternatives.
This follows a decision by the US Commerce Department to impose a 7-year ban on the company doing any kind of business involving the transfer of intellectual property, electronics, or software with American firms. This cuts off its access to chips by US-based Qualcomm and Google’s Android operating system.
ZDNet looks at how its possible for a single sanction of this sort to shut down a company as large as ZTE. It describes ZTE’s supply chain, which left it highly dependent on Qualcomm for chips and technology.
It also looks at fellow Chinese giant Huawei, which also faces scrutiny in the US over national security concerns, but is more self-sufficient. It says that Chinese competitor OnePlus is poised to take ZTE’s place if it can avoid sanctions. Xiaomi has limited business in the US, and is less likely to expand that now.