Trump says he's working with Chinese president to get ZTE 'back into business, fast'

CNBC ^ | 5/13/2018

[Poison Pill]

U.S. President Donald Trump said on Sunday that he and Chinese President Xi Jinping are working to give Chinese telecom company ZTE Corp "a way to get back into business, fast."

ZTE earlier this month suspended its main operations after the U.S. Commerce Department banned American supplies to its business.

As one of the world's largest telecom equipment makers, ZTE relied on U.S. companies such as Qualcomm and Intel for components.

[jyo19]

If Qualcomm wants to do the sales (probably a large part of their business) I can see how this would be important. The thing is, ZTE - like many Chinese companies - has to start recognizing international property law which is why they got banned in the first place.

[Windflier]

I guess it’s the art of the deal.

[proust]

“President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost.” 🤔

[gaijin]

ZTE was supplying Iran, big-time.

Got caught, said they’d fine all the executives.

Turned out they all got BONUSES and zero fines.

Here’s the kicker:

Most of the Board of Directors of ZTE are tippy-TOP Chinese intel officers —they are one and the same.

[Zhang Fei]

“The thing is, ZTE - like many Chinese companies - has to start recognizing international property law which is why they got banned in the first place.”

---

ZTE’s not an IP offender that I know of. The big IP offender is Huawei. ZTE buys significant amounts of parts from American vendors, vs Huawei, which tries to build in-house. ZTE traded with Iran and NK, was fined ~$1b and required to punish the personnel who did the deals. ZTE not only did not punish these people - it rewarded them with cash bonuses.

[proust]

So is this Trump helping bail out ZTE in exchange for China stepping back from Iran and NK?

[Zhang Fei]

“So is this Trump helping bail out ZTE in exchange for China stepping back from Iran and NK?”

---

It’s also possible that this is overkill on the part of regulators. ZTE buys $2b a year worth of parts from American vendors. This ruling will lead some non-American equipment manufacturers to source from non-American vendors, where possible. It’s a risky ploy.

What if China decided that any supplier with operations in China must stop supplying Apple? They could literally shut down Apple. Note that the impact on China’s economy wouldn’t be particularly significant, because these are all low level assembly jobs, and most of Apple’s suppliers are non-Chinese companies where most of the value-added (the design jobs) isn’t tacked on in China. But Apple would be up the creek, because all of its tooling (technically FoxConn’s) would be marooned in China with no hope of being moved out, because of Chinese regulations.

[Libloather]

ZTE

Isn't that the gear used to spy on Americans?

[Basket_of_Deplorables]

I trust Trump. Period.

Next issue, please.

[Zhang Fei]

“So is this Trump helping bail out ZTE in exchange for China stepping back from Iran and NK?”

---

Bottom line here is that with a lot of high-value ZTE jobs at stake, it wouldn’t surprise me if the Chinese threatened to lower the boom on Apple. At minimum, they could erase Apple’s Chinese sales, which amount to $50b. Given that almost all assembly is done in China, they could literally shut Apple down for several quarters. My guess is that between being shut out of China and the cessation of Chinese production, Apple could suffer a decline of $100b (~40%) in sales vs last year’s numbers. And the purchase of tooling on an emergency basis from non-Chinese sources, as well as the establishment of a new production base in a low cost labor country would probably cost tens of billions of dollars. In other words, Apple could see its earnings drop from $50b in 2017 to zero this year. That’s a lot of simoleons.

[wiseprince]

Hahahah. You all give God like attributes to the Chinese. You think they want all their high tech jobs to go away? You think that won’t ultimately be hugely damaging to their tenuous grip on power? The Chinese are not immune from uprisings. Just from the small bit that I read ZTE will come back under very different rules and will be true players going forward. Trump doesn’t tweet out of fear

[Cobra64]

Apple is in the process of moving mfg operations back to the US.

[roadcat]

What if China decided that any supplier with operations in China must stop supplying Apple?

Won't happen. Apple contracts through several companies, most notably FoxConn, which is a Taiwanese company which has factories everywhere, not just in China. And FoxConn makes products for hundreds of companies, not just Apple. If China targeted FoxConn, it would hurt hundreds of tech companies but Apple would survive as Apple builds many of its own components here in the USA as well as abroad. Apple has made a major push to manufacture more components in the USA, more so than most companies.

[StoneWall Brigade]

Thoughts?

[Eagles6]

Yep and US military personnel are barred from buying their phones because of tracking and back doors I’d guess. Affiliated Huawei too I think.

[trebb]

Those who have been paying attention have a better sense of Trump....and don’t keep finding MSM-type ways to twist crap and sound all concern-troll-like.

[9YearLurker]

Chinese companies cheat across the board and their tech companies have spying capabilities across the board.

Then, one of China’s biggest ploys is to say they will stop cheating or spying—although they never do.

To be fair, American companies are forced to incorporate spying capabilities, too. But they don’t begin to cheat and steal the way the Chinese do.

[Krosan]

Do you know if it is all Chinese companies or is ZTE worse than the others? I have a Xiaomi phone myself and kind of like it.