Chinese telecoms
SHANGHAI
A ban on using American componentsputs ZTE inperil
TALK of restricting the use of Chinesetelecoms equipmentin the West is growing.This week thecurbs went the other way, when America banned its companies from selling hardware and software for seven years to one ofChina’s state-owned tech champions, ZTE. On April 16th America’s Department of Commerce（商务部）said that China’s second-largest telecoms firm hadtrampledon a settlement reached in March 2017 over ZTE’s illegal shipments since 2010 of American-made technology—telecommunications（通信）equipment to Iran, and routers, servers and microproces- sors to North Korea—in known violation oftrade sanctions.
The one at risk of being crippled by an embargo is now ZTE. In 2016 UBS, a bank, estimated that 80-90% of its products re- lied on American parts. Jean Baptiste Su of Atherton Research, an American technol- ogy-research outfit, described the ban as “devastating” for ZTE, especially the loss of chips made by America’s Qualcomm used in about 70% of ZTE’s smartphones. Al- though ZTE makes most of its money from its telecoms-equipment business, nearly a third of its revenues come from phones.
Switching to other suppliers (and it must seek out those with zero parts sourced from America) would require handset redesigns to match new specifica- tions that would take years to bring to mar- ket, says Mr Su. The software restrictions
are just as bruising. ZTE’s phones use the Android operating system developed by Google, which under the ban may no lon- ger be able to license its apps to ZTE. It does not have its own operating system. As The Economist went to press, ZTE’s shares had been suspended from trading in Shenzhen and Hong Kong for three days.
America had dangled the threat of this sort of ban (known as a denial of export privileges) last year but shelved it whenZTE confessed to wrongdoing and paid $890m in penalties. As part of the deal ZTEpledged to discipline senior staff. But al- though it fired four people, it was found to have neither reprimanded nor cut bonuses to 35 others, as promised. That seems in- credibly foolhardy. According to the De- partment of Commerce, ZTE admitted it had submitted false statements but said it had no intention of misleading the govern- ment. The department decried “a pattern of deception” and “repeated violations”.
ZTE stood out as the only Chinese hand- set-maker to have cracked the American market; half of its phones are sold there. It is the country’s fourth-largest seller of smartphones, with a 12% share—despite its inclusion in a report from America’s House Intelligence Committee in 2012 that urged domestic telecoms firms purchasing net- working equipment to shun its products over espionage worries. (The report also targeted Huawei, ZTE’s larger Chinese ri- val, which, because of deeper concerns over its possible ties to the Chinese govern- ment, has struggled to make inroads since.)
Although the sanctions row predates the administration of President Donald Trump, it will make an example of ZTE, reckons Mr Su, as tensions mount between America and China over trade disputes and technological dominance. Since the start of the year a bill has been proposed in America’s Congress to block the govern- ment from using telecoms equipment made by Huawei and ZTE; and Mr Trump has halted the takeover of Qualcomm by Broadcom, a rival chipmaker, on national- security grounds, for fear it would give Chi- na the edge in setting standards for 5G, a wireless technology.
A parallel salvo this week, by the Feder- al Communications Commission, was all of a piece. America’s telecoms regulator voted unanimously to move forward with a plan to stop federal subsidies to domestic carriers who use suppliers that are consid- ered to be a risk to American national secu- rity. It pointed in particular to congressio- nal scrutiny of Huawei and ZTE.
Edison Lee of Jefferies, an investment bank, thinks that ZTE has a shot at negotiat- ing the ban away, but that if it fails it will hope to involve the Chinese government in a mediation process. Even if ZTE’s fate becomes a bargaining chip in a trade dis- pute, a resolution may take many months. Until then the firm will at best limp on.
[v1]虚假的，冒牌货
单词：
－phoney 虚假的；冒牌货
a phoney story 一个虚构的故事
－peril
①Uncountable 危险：at one's peril 自冒风险；
②Countable 危害: the perils of smoking 吸烟的危害
－curb
A.transitive verb 控制，限制：to curb one's temper克制脾气
B.noun 控制: a curb on [something]对某事物的控制
－trampled 踩，侵犯
●telecommunications（通信） equipment
●routers 路由器
●servers 服务器
●microproces
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