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ZTE given lifeline as the US lifts trade ban

Last updated on August 9th, 2018 at 07:31 am

ZTE has been through a rollercoaster over the last couple of months. The company had to essentially halt its business after being banned from trading with the US. This meant that ZTE couldn’t buy components from companies like Qualcomm, and it could not sell its phones in the US. Since then, the Trump administration has been looking to throw ZTE a lifeline, and this week, the trade ban was lifted.

The initial seven-year ban was put in place back in April. However, this week, it is reported that the US government has lifted sanctions after ZTE paid a $1.4 billion fine. This change of heart came after the Chinese president and Trump discussed the matter.

ZTE has also had a shakeup in leadership, with a new president taking over. Some Republicans are not on board with the decision to lift the trade ban, with Florida Senator, Marco Rubio, publicly voicing that “ZTE should be put out of business”. Wilbur Ross, the US secretary of Commerce has tried to alleviate fears, stating that a closer eye will now be placed on ZTE and its dealings.

After announcing that the trade ban has been lifted, shares in ZTE’s stock price jumped by 10 percent, which is the daily limit. ZTE still hasn’t fully recovered though, with its stock value still sitting 37 percent lower than where it was prior to the ban.

KitGuru Says: This is a major lifeline for ZTE and it’s going to be a rough few years as they try to clamber back to their perch. Do you think the US was right to lift trade sanctions on ZTE?

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