ZTE is in serious trouble again. When his conflict with the United States seemed to come to an end after arduous negotiations with Donald Trump and a expensive agreement that ZTE had no choice but to agree to, now the US Senate has confronted its own president and has reformed the National Defense Law , leaving the previous agreement without any validity and leaving ZTE in a very complicated situation.
We remind you that the previous agreement obliged ZTE to pay a large amount penalty fee of one billion dollars (more others 400 million as a guarantee) and to reform its board of directors, which was de facto intervened by the United States through what was designated as a “Compliance team” .
Although the agreement allowed ZTE to return to doing business in the US with the possibility of buying back chips from Qualcomm and other US manufacturers, the Senate continues to consider the Chinese company as dangerous for its security. voted in favor of a reform that limits the powers of its president.
The agreement with ZTE did not please almost anyone
It seems that the agreement reached by Donald Trump was not very well received, and not only by the Democratic party, but from the Republican party itself they did not approve of the solution that the president had given to the conflict with ZTE.
The way to leave Trump in the lurch has been to reform the National Defense Law , since we remind you that all this ZTE conflict with USA came as a result of the breach by the Chinese of an agreement of commercial block about Iran, which also came with some accusations of espionage made by ZTE through the firmware of their phones.
In short, the American Senate sees ZTE as a danger for safety of the country and have reformed the aforementioned law so that said Senate has the power to revoke unilateral acts of the Government, so that in this matter, Trump is tied hand and foot and at the mercy of what the camera decides.
We go back to the beginning and Huawei will also be affected
With the reform of the National Defense Law, the United States government has strictly forbidden to buy (or rent) material from ZTE and the Chinese manufacturer of smartphones will not be able to carry out any commercial operation with the United States, which implies once again running out of Qualcomm processors as well as any other chip from the same company or from any other American company such as Intel.
It is clear that for the American companies the volume of sales that ZTE implies will not be a significant blow, but for ZTE this decision places them in agreement with the abyss and with very little room for maneuver to be able to resume their activity, not to mention that the North American market accounts for 30% of its income.
The issue also extends to other companies, since the ban imposed on the Government by the Senate covers all Chinese companies, so Huawei could see how the North American market closes its doors, with the loss of income that would entail.
Of course, it would be a shame if a company like Huawei, which is one of the biggest sellers in the world and lately is creating smartphones of very high level, had to pay the consequences of this conflict.
We hope that in the end United States of a respite to ZTE and can reach a new agreement that satisfies both parties. We will continue informing you of the evolution of this story.