US/China Cold War Can Count ZTE As First Major Casualty

When it was announced that the US was banning the Chinese electronics giant ZTE from purchasing supplies from American companies, the entity said that the move would cripple its business. It seems this was no exaggeration as ZTE has just announced that it was stopping “major operating activities” due to the ban by the Trump administration.

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

This is apparently not just for show, either. It seems that factories in Shenzhen are now seeing workers simply loafing around instead of being busy assembling or building gadgets. Trade for ZTE shares has been suspended for weeks now, as well. While the company is still putting on a brave face, it’s basically looking at a death sentence, the New York Times reports.

With such an abrupt throttling of supplies from US suppliers, there was just no way for ZTE to cope with the loss of resources. There are other options, but the results would be nowhere near what they would usually produce if they had US parts in terms of quality. Without the technology to power their products, ZTE is simply unable to remain competitive.

Currently, negotiations are still underway, with the Chinese government actually broaching the subject with the US on behalf of ZTE. The company itself has been trying to convince regulators to at least modify the terms so that it could survive the ban, TechCrunch reports. As it stands, the Trump administration seems intent on sparking a trade war.

If that comes to pass, it won’t just be the US and China that will suffer the consequences. ZTE does business in over 160 countries. If it goes under, it will be a major economic shakeup for the world.