Analysts said a worst-case scenario could entail Huawei suffering the same fate as smaller Chinese rival ZTE which has lost access to USA -made components as well as Google Android software in a similar probe.
This trade and technology war that's unfolding between China and the United States claimed its latest victim last week in smartphone maker and industry supplier ZTE. ZTE is now facing a seven year supply ban for selling its devices in the Middle Eastern country.
ZTE, whose overseas revenue accounted for 43.06 percent of its total 2017 revenue, made great investments in compliance governance over the past two years.
The DOJ's actions follow a larger pattern of the US increasingly cracking down on Chinese firms. With 5G communication networks to start official run in 2020, ZTE has invested heavily in R&D projects associated with 5G frequency spectrums, core networks, base stations and chipset solutions, and has also completed 5G network equipment tests for more than 20 telecom operators in China and other countries. This includes any possible sanctions from the US, EU, and UN.
"Despite extremely challenging circumstances, the board of directors and managers of the company will try their best to protect 80,000 staff members' legitimate working rights and the interests of their families", said Yin Yimin, chairman of ZTE Corp.
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In a letter to ZTE's employees, the company's chairman Yin Yimin said that ZTE " is following closely with this issue and will uphold openness, transparency and integrity to continue to communicate, and at the same time, will solve it with legitimate means, seeking to reduce the adverse impact resulted from this issue".
ZTE will definitely be hit hard, but it won't be alone.
China has achieved major advancements and strong competitiveness in such industrial sectors as display panels, passive components, LED, computer chassis, and PV power.
US President Donald Trump apparently knows this well.
It is not known whether a Qualcomm representative was on the ZTE call and the company declined to comment. In short, the company defends itself by saying that it has been working to comply with the terms of the settlement, and that it is working with the US Department of Commerce to "resolve the ban". ZTE was banned from purchasing components from United States suppliers, including access to Google's Android operating system.