XI'AN, China -- ZTE posted a net loss of 7.8 billion yuan ($1.1 billion) for the first half ended June 30, falling from the year-earlier 2.3 billion yuan profit as a monthslong ban on American technology imports exacted a toll.
Operating revenue fell 27% to 39.4 billion yuan, the Chinese telecom equipment maker said Thursday. ZTE was forced to halt operations shortly after the U.S. banned domestic suppliers from doing business with the Chinese company for violations of Iran and North Korean sanctions.
The ban, initially intended for seven years, was lifted in mid-July after the company reached a deal with the Trump administration, and production has resumed. But the business environment remains tough as the company's reputation suffered.
The company did not hold a news conference on the interim results. At an extraordinary shareholders meeting Tuesday, President Xu Ziyang said ZTE remains on the "front line" of the communications sector.
"Core production is back to normal, and we will now focus on in-house development of semiconductors," said Xu. "Current order levels are on par with last year's," he added.
A ZTE employee in charge of overseas sales acknowledges the headwinds the company is facing.
"We lost many ongoing projects" when the ban was in force, he told Nikkei. "It is difficult to regain trust. Clients no longer trust us."
Australia has in effect barred ZTE and compatriot Huawei from providing equipment for its introduction of 5G cellular networks. Canberra is concerned that their communications equipment could be used to leak sensitive information to the Chinese government.
Countries around the world are preparing to launch 5G service, with speeds 100 times that of 4G. In a quest to rapidly expand global market share in this environment, ZTE spent heavily on development, with the effort buoyed by massive government support. If other countries follow the Australian example, ZTE would stand to suffer even more damage.