ZTE will postpone the release of its quarterly earnings report after the United States government banned American companies from selling goods to the Chinese telecom and smartphone maker. In a filing with the Hong Kong stock exchange, ZTE said that its earnings report, originally set to be released on Thursday, is now delayed to an undetermined date.
About a year ago, ZTE pleaded guilty to violating U.S. sanctions against Iran and North Korea. Its deal with the U.S. government included penalties and fines totaling more than a billion dollars, but allowed it to continue doing business with U.S. suppliers.
On Monday, however, the U.S. Department of Commerce announced that ZTE had failed to follow the agreement’s terms. It accused the company of making false statements and failing to punish employees and senior management. As a result, the Department of Commerce slapped ZTE with a seven-year export restriction.
This is a huge blow to ZTE, which sources a significant portion of its most important components, including processors, from U.S. companies like Qualcomm. It also means ZTE may lose access to software licensed from Google, including Android.
This is the latest in ZTE’s string of entanglements with the U.S. government. Despite holding fourth place in the U.S. smartphone market share, after Samsung, Apple and LG, ZTE is under scrutiny by U.S. intelligence agencies, which believe that it and fellow Chinese smartphone maker Huawei may pose security concerns.
