In a stock exchange filing, Chinese tech manufacturer ZTE says that it has “ceased” most of its business as it is under a denial order that the US Department of Commerce.
“As of now, the company maintains sufficient cash and strictly adheres to its commercial obligations subject in compliance with laws and regulations,” the company stated.
An employee told Reuters that business trips have not been planned and workers are reporting to their positions with not much to do. Another said that this was “the biggest challenge” he’s seen his employer go through in his ten-year tenure and hoped that Chinese President Xi Jinping would help in this situation. Others were “cagey” talking to media, but expressed general concern.
The denial order, issued after ZTE was found to have breached trade sanctions and a settlement for the sanctions, prevents the company from procuring products from American companies for the next 7 years. The company made an official request to the Commerce Department to suspend the ban this weekend.
Analysts aren’t confident ZTE will be able to operate at full capacity even if it can find alternative suppliers. Already, Taiwan-based MediaTek has suspended shipments to ZTE per an order from its government on undefined concerns about ZTE. The semiconductors producer will procure an export permit to continue shipments.
ZTE has suspended sales on its Chinese platforms while third-party marketplaces have stopped stocking new units.