This week, Chinese smartphone maker ZTE came under fire in both the UK and the US. Here in the UK, the government warned that the company’s devices pose a risk to national security, meanwhile the US Department of Commerce blacklisted the company. Due to the ban in the US, ZTE will no longer be able to acquire Qualcomm processors for its smartphones, and it could potentially lose its licence to use Android.
On Monday, the US Department of Commerce issued a seven-year supply ban to ZTE, which means the company loses access to technologies created by both Qualcomm and Dolby. Aside from hardware, it could also impact the company’s ability to ship Android-based devices. According to a source speaking with Reuters, the company is in danger of losing its Android license from Google, but no final decisions have been made at the time of publishing.
While the UK security warning is bad news for ZTE, the supply ban in the US poses a bigger issue. It is estimated that ZTE sources a third of its components from US companies, and without access, it will need to completely rethink its smartphone line up.
The ban itself was issued after ZTE violated a trade agreement and was caught shipping US technology to Iran and North Korea. Initially, ZTE was set to let go of senior staff members and discipline 35 more, but according to Wilbur Ross, the US secretary of commerce, these staff members for ‘rewarded’ instead.
KitGuru Says: Asia is a huge market for smartphone sales, so ZTE could survive outside of the US. However, losing the Android license could end up being a big problem.