The US-China tech war has forced a Chinese smartphone maker to halt production

[F-22Raptor]

Last month, Washington dealt a major casualty in the standoff with Beijing over technology when the US commerce department ordered American companies to stop supplying components to China’s ZTE, the fourth-largest handset brand in the US.

The US penalty came in response to ZTE’s violations of Iran sanctions, and a failure to comply with a guilty plea agreement the telecom manufacturer made. But it also arrived as tensions between China and the US over technology reach new highs. Already, the Shenzhen-based company is facing a painful aftermath. Today (May 9) the company filed a notice (pdf) to the Hong Kong Stock Exchange stating “major operating activities of the Company have ceased.”

The company’s page on Tmall (link in Chinese), one of China’s major e-commerce sites, doesn’t link to any product listings. Instead, it states that the page is “undergoing maintenance,” and shows a photo of rowers alongside text that roughly translates to “Youth is a time for fighting.”

Links to the company’s official online page for its phone catalogs direct users to the same image. The Nikkei Asian Review reports that some carriers in China are continuing to sell ZTE phones in their retail outlets but are nearly out of stock (paywall), with one employee saying production was stalled. The company’s page on JD.com, another Chinese e-commerce site, remains up and running. ZTE could not be reached for comment.

When the US restrictions were first announced, analysts stated the move would cripple ZTE in the short term, at best relegating it to a maker of rudimentary smartphones with out-of-date technology. Over 50% of its smartphones come packed with processors from San Diego-based Qualcomm, while the bulk of its remaining devices rely on chipsets from Taiwan’s MediaTek. While ZTE can continue to rely on MediaTek to supply it for mid-range devices, no chipmaker other than Qualcomm can adequately power the company’s high-end devices (paywall).

On Sunday, ZTE said in a filing to the Shenzhen stock exchange, where its shares are also traded, that it had asked the US commerce department to suspend the sales ban. Meanwhile, the penalty will likely serve as a further impetus for Beijing to improve its domestic semiconductor industry and become less reliant on foreign companies like Qualcomm. A state-backed investment fund known as the China Integrated Circuit Industry Investment Fund Co. is currently raising 300 billion yuan ($47.4 billion) (paywall) to finance Chinese homegrown semiconductor firms.

https://qz.com/1273123/the-us-china-tech-war-has-apparently-forced-zte-to-halt-smartphone-sales/

 

[antonius123]

US can't do much. If she cripple ZTE, her Qualcomm etc will be shaken, the collateral damage for US is not light.

If ZTE crippled, china still has Huawei that will rise to be formidable competitor to kill Qualcomm etc in the mid term period of competition.

 

[LeGenD]

US can't do much. If she cripple ZTE, her Qualcomm etc will be shaken, the collateral damage for US is not light.

If ZTE crippled, china still has Huawei that will rise to be formidable competitor to kill Qualcomm etc in the mid term period of competition.

ZTE is in big trouble and it is not a small brand - cannot be more specific than this. FYI: https://www.cnet.com/news/ztes-business-has-come-a-grinding-halt-after-the-us-ban/

This shows that China is not immune to the pressures of globalization.

Huawei's access to American markets is restricted and now under probe for its Iran-related dealings: https://www.wsj.com/articles/huawei-under-criminal-investigation-over-iran-sanctions-1524663728

Underestimate the US at your own peril, my friend. USSR ring any bells?

You don't mess with your largest customer just like that. It would be in the best interests of China to renew its trade-related terms with the US with certain concessions to the US.

 

[phancong]

ZTE is in big trouble and it is not a small brand - cannot be more specific than this. FYI: https://www.cnet.com/news/ztes-business-has-come-a-grinding-halt-after-the-us-ban/

This shows that China is not immune to the pressures of globalization.

Huawei's access to American markets is restricted and now under probe for its Iran-related dealings: https://www.wsj.com/articles/huawei-under-criminal-investigation-ouver-iran-sanctions-1524663728

Underestimate the US at your own peril, my friend. USSR ring any bells?

You don't mess with your largest customer just like that. It would be in the best interests of China to renew its trade-related terms with the US with certain concessions to the US.

Huawai growing big never establish their present in US market, likely all China high tech company will ween themselves off dependent of US export tech components. Make in China 2025 is about dominate the tech industry without rely on import of any components from abroad. A heckup at the moment for China ZTE to sustain their production but in a loss long run China domestic Tech company will provide a full economic system for China high tech industry.

 

[jhungary]

US can't do much. If she cripple ZTE, her Qualcomm etc will be shaken, the collateral damage for US is not light.

If ZTE crippled, china still has Huawei that will rise to be formidable competitor to kill Qualcomm etc in the mid term period of competition.

ZTE was not that big of a customer in US market nor have many US company dealing, Most of the ZTE sales are in China (They are second biggest Telco in China) and The phone they sell in China does not contain much US parts.

Even the stuff that sell overseas, the US parts are limited to mid-low grade product.

Huawai growing big never establish their present in US market, likely all China high tech company will ween themselves off dependent of US export tech components. Make in China 2025 is about dominate the tech industry without rely on import of any components from abroad. A heckup at the moment for China ZTE to sustain their production but in a loss long run China domestic Tech company will provide a full economic system for China high tech industry.

Would not say this is good for China in a long run. That is an isolationist ideology and frankly, nobody can actually do that to begin with, because that would be stupid and wasted too much money to get some technology that already exist. And then you cannot use it outside China.

Furthermore, would China actually be able to do that in 2025 is another question. Tech field in China is still at its infancy, take Quantum Computing as an example. The current share of Quantum Computing is about 20% in China (which mean Chinese hold approximately 1/5 key technology in quantum computing) and I don't think China, or any country can reach 100% or near 100% without depending on other.

A smart country will team up with Friendly country and do the research together, like what the US did with South Korea and what UK do with Japan or Germany. If Chinese is going in alone, that is the hardest way to go, and to be honest, it may change what it is perceived in China, but would not make any different in the world.

 

[j20blackdragon]

ZTE is in big trouble and it is not a small brand - cannot be more specific than this. FYI: https://www.cnet.com/news/ztes-business-has-come-a-grinding-halt-after-the-us-ban/

This shows that China is not immune to the pressures of globalization.

Huawei's access to American markets is restricted and now under probe for its Iran-related dealings: https://www.wsj.com/articles/huawei-under-criminal-investigation-over-iran-sanctions-1524663728

Underestimate the US at your own peril, my friend. USSR ring any bells?

You don't mess with your largest customer just like that. It would be in the best interests of China to renew its trade-related terms with the US with certain concessions to the US.

ZTE (an individual company) might be in trouble.
China (the country) is not in any trouble at all.

High-end SoC handled by HiSilicon.

Mid-range SoC handled by MediaTek.

Notice that the modem is incorporated in both SoCs above. Qualcomm not required.

NAND Flash handled by Samsung.

RF devices are easily replaced.

ZTE relies on Qualcomm baseband modems in many handsets, but Chinese alternatives such as Spreadtrum are available as a possible substitute. ZTE uses mostly discrete RF devices, including amplifiers from Skyworks and filters from Qualcomm. Because these are simple discrete devices, ZTE should be available to develop replacements from Chinese and Japanese suppliers within about 3 or 4 months.
https://www.fiercewireless.com/tech/industry-voices-madden-impact-ban-exports-to-zte

Wi-Fi,Bluetooth,GPS?

MediaTek Announces World's Smallest 4-in-1 Combo Chip Wi-Fi/Bluetooth/GPS/FM Solution
July 21, 2011 - MediaTek Inc., a leading fabless semiconductor company for wireless communications and digital multimedia solutions, today announced its most advanced wireless combo chip designed to enrich multimedia experience with small footprint and long battery life for smartphones, tablets and portable devices. The MediaTek MT6620 integrates 802.11n Wi-Fi, Bluetooth 4.0+HS, GPS, and FM transmitter/receiver on a single chip with superior size and power benefits, making it the best solution for smartphones, tablets, and portable devices.
https://www.mediatek.com/news-event...-1-combo-chip-wi-fi-bluetooth-gps-fm-solution

The list goes on and on. I'm not gonna cover every single component in a phone, but you get the idea.

Any country that can make something like this with no US components...

can also make smartphones and telecom equipment with no US components. Stop believing everything the Western media tells you, and do your own research.

 

[Götterdämmerung]

Just my POV, I think this has become the cheapest PR campaign to wake up not only the Chinese industrialists but also the general population to become self-reliant and keep a good distant to anything from the US, and I'm sure it will become successful because China does not have sock puppets of the US deep state such as practically all EU politicians who, aside from doing some lame cosmetic works when Edward Snowden revealed the pervasive NSA spying on its "partners", nothing has been done. We still don't have our search engine, we still don't have our supra-national social network, we still don't have an EU counterpart of Amazon or eBay, nothing, zero, nada.

 

[phancong]

ZTE was not that big of a customer in US market nor have many US company dealing, Most of the ZTE sales are in China (They are second biggest Telco in China) and The phone they sell in China does not contain much US parts.

Even the stuff that sell overseas, the US parts are limited to mid-low grade product.



Would not say this is good for China in a long run. That is an isolationist ideology and frankly, nobody can actually do that to begin with, because that would be stupid and wasted too much money to get some technology that already exist. And then you cannot use it outside China.

Furthermore, would China actually be able to do that in 2025 is another question. Tech field in China is still at its infancy, take Quantum Computing as an example. The current share of Quantum Computing is about 20% in China (which mean Chinese hold approximately 1/5 key technology in quantum computing) and I don't think China, or any country can reach 100% or near 100% without depending on other.

A smart country will team up with Friendly country and do the research together, like what the US did with South Korea and what UK do with Japan or Germany. If Chinese is going in alone, that is the hardest way to go, and to be honest, it may change what it is perceived in China, but would not make any different in the world.

US don’t want to partner with China to help develop high tech industry in China, what other choice to spurn your own development with heavy investment in R&D for China self sustainable high tech development. In military US ban sale cHina all kinds of weapons, now China have their own military industrial complex to build their own weapons. Take decade but China now can produce their own military equipment same will be with the whole ecosystem in high tech industry, will take China bit longer but China will get there.

Just my POV, I think this has become the cheapest PR campaign to wake up not only the Chinese industrialists but also the general population to become self-reliant and keep a good distant to anything from the US, and I'm sure it will become successful because China does not have sock puppets of the US deep state such as practically all EU politicians who, aside from doing some lame cosmetic works when Edward Snowden revealed the pervasive NSA spying on its "partners", nothing has been done. We still don't have our search engine, we still don't have our supra-national social network, we still don't have an EU counterpart of Amazon or eBay, nothing, zero, nada.

That mean US totally control EU Ecommerse and high tech telecom industry.

 

[Götterdämmerung]

That mean US totally control EU Ecommerse and high tech telecom industry.

We still have Ericsson and a few other telco equipment manufacturer but anything to protect us from the US regime narrative such as facebook, twitter and the like is completely missing.

 

[dy1022]

ZTE (an individual company) might be in trouble.
China (the country) is not in any trouble at all.

High-end SoC handled by HiSilicon.

Mid-range SoC handled by MediaTek.

Notice that the modem is incorporated in both SoCs above. Qualcomm not required.

NAND Flash handled by Samsung.

RF devices are easily replaced.


Wi-Fi,Bluetooth,GPS?


The list goes on and on. I'm not gonna cover every single component in a phone, but you get the idea.

Any country that can make something like this with no US components...

can also make smartphones and telecom equipment with no US components. Stop believing everything the Western media tells you, and do your own research.

3D NAND Flash handled by XMC in Wuhan.

http://www.xmcwh.com/

 

[jhungary]

US don’t want to partner with China to help develop high tech industry in China, what other choice to spurn your own development with heavy investment in R&D for China self sustainable high tech development. In military US ban sale cHina all kinds of weapons, now China have their own military industrial complex to build their own weapons. Take decade but China now can produce their own military equipment same will be with the whole ecosystem in high tech industry, will take China bit longer but China will get there.

To begin with, the Chinese weapon market is still small internationally, and the Military Industrial Complex were more or less blessed with Russian Technology. I don't think you will denied the fact that the Chinese military product get to the points today thanks mostly to Russia, right? J family fighter (J-11,15 and 16), how the Sovremennyy Class play a role in future Chinese destroyer design, and also how Australia's Melbourne class and Russian Varyag class carrier help with the Chinese Carrier program. Even today, Chinese is still getting help from Russia via S-400 and Su-35 with the latest technology.

Now imagine how long and expensive will be without the Russian influence in the military structure?

It's stupid to go in alone, and to be honest, I don't think it is possible to have Chinese manufacture EVERYTHING in 2025. Infact, I don't think it is at all possible to have all made in China in any given time, even US cannot build their own military force without outside help today (BAe, FN, Thales all contribute to US military industrial complex) It may score some brownie point to local politician but I honestly don't see it that way.

 

[Beast]

ZTE (an individual company) might be in trouble.
China (the country) is not in any trouble at all.

High-end SoC handled by HiSilicon.

Mid-range SoC handled by MediaTek.

Notice that the modem is incorporated in both SoCs above. Qualcomm not required.

NAND Flash handled by Samsung.

RF devices are easily replaced.


Wi-Fi,Bluetooth,GPS?


The list goes on and on. I'm not gonna cover every single component in a phone, but you get the idea.

Any country that can make something like this with no US components...

can also make smartphones and telecom equipment with no US components. Stop believing everything the Western media tells you, and do your own research.

This LeGenD is a well known US boot licker, flying the Pakistan flag. He will closed all his eyes and claimed anything from US is the best. His words about China is as good as thrash.

ZTE is in big trouble and it is not a small brand - cannot be more specific than this. FYI: https://www.cnet.com/news/ztes-business-has-come-a-grinding-halt-after-the-us-ban/

This shows that China is not immune to the pressures of globalization.

Huawei's access to American markets is restricted and now under probe for its Iran-related dealings: https://www.wsj.com/articles/huawei-under-criminal-investigation-over-iran-sanctions-1524663728

Underestimate the US at your own peril, my friend. USSR ring any bells?

You don't mess with your largest customer just like that. It would be in the best interests of China to renew its trade-related terms with the US with certain concessions to the US.

Really? Mighty USA blocked chips for China supercomputer and guessed what?

https://www.google.com/amp/s/www.recode.net/platform/amp/2017/6/20/15812270/china-fastest-supercomputer-us-exascale-department-energy-intel-nvidia-ibm

I pity your ignorant. ZTE is just a small fried company in China. The real deal
Is huawei. And China can easily killed off USA by banning iPhone right to manufacture in China and ban all iPhone sales. China suffer only few thousand of workers job losses but compare to complete closed down of Apple since 95% of their product is made in China. When u don’t have product to ship, your business is as good as zero. And I know you smart Alec will bragged Apple can shift to India to make phone. May I know how long will it take? Maybe in your pipe dream that all it take is 1 week and Apple can resume making iPhone as good and cheap as in China? Apple is the daring company in NASDAQ. If Apple collapsed , Wall Street will collapse.

US companies outsourcing their whole factory to China is at China mercy.

 

[antonius123]

ZTE was not that big of a customer in US market nor have many US company dealing, Most of the ZTE sales are in China (They are second biggest Telco in China) and The phone they sell in China does not contain much US parts.

Even the stuff that sell overseas, the US parts are limited to mid-low grade product.

ZTE is not big in US market, but big enough in the WORLD Market for their telecom equipments, and they use qualcomm. That is why ZTE is important client of qualcomm. Qualcomm stock price decline due to this issue and they cut their employees already.

There are 2 scenarios where both will benefit china and harm us importance:

Scenario 1: US only embargo ZTE:

• ZTE will be crippled
• Qualcomm revenue will decline significantly, hence their future R&D will decline as well.
• Huawei will take advantage by taking over the market share left by ZTE and growing stronger, hence their R&D will be getting strong.
• Then perhaps in next 5 year Huawei products will be more advanced due to stronger r&d while Qualcomm products will be mediocre due to their decline. => china benefit, us loose.

Scenario 2: US embargo most chinese tech companies (ZTE, Huawei, Xiaomi, Vivo, Oppo, Lenovo, TCL, One1, Meizu, etc):

• Qualcomm and other US suppliers supplying to them will die
• China will force her smartphone companies to use domestic processor (speadtrum, kirin, etc) or mediatek, and chinese OS (Alliyun, etc), by imposing high tarriff on US tech and high tax for Android users.
• Chinese smartphone producers still can be alive with chinese market, though their overseas sales may decrease but they can build foothold with their own technology in overseas market; while US apple will be impacted severely either due to being bared or imposed high tax in chinese market.
  
• At the end, chinese OS will rise to compete with Android, and chinese processor (kirin, speadtrum) will become leaders supllanting dying Qualcomm etc. => china benefit, us loose.

As you see, with both scenario US will suffer more and china will benefit.

In fact the embargo to ZTE is a movement that benefit China though harm ZTE. Because due to this embargo, china have reason to take actions that benefit her purpose to become self reliance in technology like subsidizing her domestic tech companies, protecting her tech companies by regulations or imposing barrier or high tarrif on imported technologies, etc though that measurements are against spirit of free trade committed by most countries including china.

Would not say this is good for China in a long run. That is an isolationist ideology and frankly, nobody can actually do that to begin with, because that would be stupid and wasted too much money to get some technology that already exist. And then you cannot use it outside China.

In fact it will be good for China in a long run.

Isolationist will be bad for smaller country;but it will not that bad for country with huge market and abundant natural resources. In fact isolationist china will harm other countries (US, japan, korea, europe, etc) more than china herself.

It may not be good for international trade and economic purpose which will bring efficiency for all countries participating in free trade (economic theory). But it will definitely be good for china if US impair this free trade by embargoing china. Means China will and need to do that if US stop supplying her the technology that she need. That is 100% certain.

A smart country will team up with Friendly country and do the research together, like what the US did with South Korea and what UK do with Japan or Germany. If Chinese is going in alone, that is the hardest way to go, and to be honest, it may change what it is perceived in China, but would not make any different in the world.

Building own domestic supplier doesn't mean being isolationist.

China has done it before, and as you may have seen China were still be able to enjoy free trade while establishing own domestic suppliers (eg: robotics, telcom, high speed train, heavy machineries, etc).

 

[Nan Yang]

Last month, Washington dealt a major casualty in the standoff with Beijing over technology when the US commerce department ordered American companies to stop supplying components to China’s ZTE, the fourth-largest handset brand in the US.

The US penalty came in response to ZTE’s violations of Iran sanctions, and a failure to comply with a guilty plea agreement the telecom manufacturer made. But it also arrived as tensions between China and the US over technology reach new highs. Already, the Shenzhen-based company is facing a painful aftermath. Today (May 9) the company filed a notice (pdf) to the Hong Kong Stock Exchange stating “major operating activities of the Company have ceased.”

The company’s page on Tmall (link in Chinese), one of China’s major e-commerce sites, doesn’t link to any product listings. Instead, it states that the page is “undergoing maintenance,” and shows a photo of rowers alongside text that roughly translates to “Youth is a time for fighting.”

Links to the company’s official online page for its phone catalogs direct users to the same image. The Nikkei Asian Review reports that some carriers in China are continuing to sell ZTE phones in their retail outlets but are nearly out of stock (paywall), with one employee saying production was stalled. The company’s page on JD.com, another Chinese e-commerce site, remains up and running. ZTE could not be reached for comment.

When the US restrictions were first announced, analysts stated the move would cripple ZTE in the short term, at best relegating it to a maker of rudimentary smartphones with out-of-date technology. Over 50% of its smartphones come packed with processors from San Diego-based Qualcomm, while the bulk of its remaining devices rely on chipsets from Taiwan’s MediaTek. While ZTE can continue to rely on MediaTek to supply it for mid-range devices, no chipmaker other than Qualcomm can adequately power the company’s high-end devices (paywall).

On Sunday, ZTE said in a filing to the Shenzhen stock exchange, where its shares are also traded, that it had asked the US commerce department to suspend the sales ban. Meanwhile, the penalty will likely serve as a further impetus for Beijing to improve its domestic semiconductor industry and become less reliant on foreign companies like Qualcomm. A state-backed investment fund known as the China Integrated Circuit Industry Investment Fund Co. is currently raising 300 billion yuan ($47.4 billion) (paywall) to finance Chinese homegrown semiconductor firms.

https://qz.com/1273123/the-us-china-tech-war-has-apparently-forced-zte-to-halt-smartphone-sales/

In Chinese crisis 危机 is made of two words danger and opportunity.
危险 - danger
机会 - opportunity

 

[jhungary]

ZTE is not big in US market, but big enough in the WORLD Market for their telecom equipments, and they use qualcomm. That is why ZTE is important client of qualcomm. Qualcomm stock price decline due to this issue and they cut their employees already.

There are 2 scenarios where both will benefit china and harm us importance:

Scenario 1: US only embargo ZTE:

• ZTE will be crippled
• Qualcomm revenue will decline significantly, hence their future R&D will decline as well.
• Huawei will take advantage by taking over the market share left by ZTE and growing stronger, hence their R&D will be getting strong.
• Then perhaps in next 5 year Huawei products will be more advanced due to stronger r&d while Qualcomm products will be mediocre due to their decline. => china benefit, us loose.

Scenario 2: US embargo most chinese tech companies (ZTE, Huawei, Xiaomi, Vivo, Oppo, Lenovo, TCL, One1, Meizu, etc):

• Qualcomm and other US suppliers supplying to them will die
• China will force her smartphone companies to use domestic processor (speadtrum, kirin, etc) or mediatek, and chinese OS (Alliyun, etc), by imposing high tarriff on US tech and high tax for Android users.
• Chinese smartphone producers still can be alive with chinese market, though their overseas sales may decrease but they can build foothold with their own technology in overseas market; while US apple will be impacted severely either due to being bared or imposed high tax in chinese market.
  
• At the end, chinese OS will rise to compete with Android, and chinese processor (kirin, speadtrum) will become leaders supllanting dying Qualcomm etc. => china benefit, us loose.

As you see, with both scenario US will suffer more and china will benefit.

In fact the embargo to ZTE is a movement that benefit China though harm ZTE. Because due to this embargo, china have reason to take actions that benefit her purpose to become self reliance in technology like subsidizing her domestic tech companies, protecting her tech companies by regulations or imposing barrier or high tarrif on imported technologies, etc though that measurements are against spirit of free trade committed by most countries including china.



In fact it will be good for China in a long run.

Isolationist will be bad for smaller country;but it will not that bad for country with huge market and abundant natural resources. In fact isolationist china will harm other countries (US, japan, korea, europe, etc) more than china herself.

It may not be good for international trade and economic purpose which will bring efficiency for all countries participating in free trade (economic theory). But it will definitely be good for china if US impair this free trade by embargoing china. Means China will and need to do that if US stop supplying her the technology that she need. That is 100% certain.



Building own domestic supplier doesn't mean being isolationist.

China has done it before, and as you may have seen China were still be able to enjoy free trade while establishing own domestic suppliers (eg: robotics, telcom, high speed train, heavy machineries, etc).

lol. You do know the world did not work just because you say so. You have overestimated ZTE business involvement and underestimated Qualcomm business for like a mile...

Qualcomm lost due to this ZTE scandal is minimal. Consider this ZTE main business is network hardware support (which own 54% of their profit) Qualcomm did not have anything in this field, Qualcomm is a major SoC (UMTS and CPU) manufacturer, which only used in mobile phone, tablet and wireless modem, which is according to ZTE, 17% of their profits. And a lot of other stuff Qualcomm did was not in the ZTE field (such as graphic accelerator, binary processing structure)

Most of what the ZTE source is locally, which mean it will hurt Chinese business had they been out of operation.

Qualcomm on the other hand, is getting 46 billions to buy off NXT and expanding their business.

And no, if this does not work good on international trade (as you said so yourself) this is not going bring efficiency to other country. Free trade theory bound by trading practice, not bound by trade volume or import/export balance. If a country did not have good trading practices, free trade theory would suggest trading would be hinder and less effective due to governmental control. That is what economists labelled as left wing economic policy.

The rest of your point. Well....