ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Companies

ZTE sinks $1bn into red in first half as US ban bites

Chinese smartphone vendor faces headwinds from damaged reputation

ZTE was forced to suspend operations for three months by a ban on U.S. companies selling parts to the telecommunications equipment maker.   © Reuters

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."

In addition to selling communications equipment at home and in the U.S., ZTE supplies Japan's top three mobile carriers, NTT Docomo, KDDI and SoftBank.

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.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends June 30th

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media