China looks to speed up chip plans as U.S. trade tensions boil

Casey Dawson
April 20, 2018

Following the decision by United States regulators to impose a seven year ban on exports to ZTE, the phone maker has been uncovered a potential major problem.

ZTE has delayed its earnings results, originally scheduled for today, saying it needs time to assess the impact of the United States sanctions.

According to Reuters' story, ZTE and Alphabet have yet to determine whether the Commerce Department's order would preclude ZTE from using Android (again, they likely mean Android with GMS) on its smartphones.

Under the order American companies are banned from selling parts and software to ZTE for seven years.

ZTE said in a statement that its board had postponed a meeting to approve the results, pending an assessment of the impact of the move by the US government.

"The Trump administration's stance against Huawei and ZTE is very much in line with its antagonistic approach to trade policy with China", Michael Plouffe, a lecturer in worldwide political economy at University College London (UCL), told DW. Alphabet and ZTE are now in discussions to determine what course of action is possible if Google is legally prevented from licensing its software.

During one three-month period a year ago, Huawei overtook Apple to become the world's second largest smartphone maker, according to figures by Counterpoint Research.

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Neither ZTE nor Google has managed to come to a conclusion yet either, with both companies having already met to discuss the matter.

ZTE has not responded to requests to describe how it intends to respond to the ban, which a senior U.S. Commerce official told Reuters is unlikely to be lifted.

The Commerce Department initially banned USA companies from selling to ZTE in 2016 after the Chinese company was caught shipping equipment with US components to Iran in violation of US export controls.

He said while potential security threats stem from Huawei and ZTE's close relationships with the Chinese government, similar concerns could be applied to any other infrastructure supplier where hardware can be compromised with backdoor access. Regardless, it's not looking good for ZTE in the Android world...

ZTE may not be the biggest or most popular Android OEM today, but it sells a lot of smartphones. "We will continue to monitor the situation closely". According to a Reuters report, the ruling may, in fact, end up costing ZTE its Android license.

"Hidden "backdoors" to our networks in routers, switches, and other network equipment can allow hostile foreign powers to inject viruses and other malware, steal Americans' private data, spy on USA businesses, and more", said FCC Chairman Ajit Pai, who introduced the proposal.

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