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Trade War

Taiwan tells companies to seek green light for trading with ZTE

Permits to be approved in three to five days if cleared

ZTE's offices in Beijing. Following a ban in the U.S., Taiwanese authorities have now blocked the island's companies from trading with ZTE.   © Reuters

TAIPEI -- The Taiwanese government has ordered all of the island's companies that sell to ZTE to suspend shipments until they obtain approval.

The April 23 notice from the Ministry of Economic Affairs' Bureau of Foreign Trade came the week after the U.S. imposed a seven-year ban on American technology exports to the Chinese telecommunications equipment builder and smartphone maker for violating a settlement by illegally doing business with Iran and North Korea. It was unclear whether Washington had pressured Taipei to issue the new notice.

The market learned of the move when MediaTek CEO Rick Tsai said in a Friday earnings conference call that his company has suspended doing business with ZTE after receiving a notice from the government. MediaTek is the world's No. 2 mobile chip maker after Qualcomm and supplies almost all Chinese smartphone makers, including Huawei, ZTE, Oppo, Lenovo Group and Vivo.

David Hsu, deputy director-general and spokesman for the Bureau of Foreign Trade, confirmed the notice to the Nikkei Asian Review but said the government did not actually bar Taiwanese companies from doing business with ZTE.

"What we do [asking suppliers to apply for an export permit] was for the companies' own good, to ensure they are doing legal business with the Chinese firms," Hsu said by phone.

"We do not ban Taiwanese companies to do business with ZTE. ... There is no reason for the government to reject their permit if their business activities are legal," he said.

The bureau on Friday night said in a press statement that all Taiwanese manufacturers wishing to export products to ZTE and ZTE Kangxun Telecommunications must apply for an additional export permit for sensitive high-tech commodities from the Taiwanese government, effective April 23.

It said permits will be approved within three to five business days for Taiwanese suppliers if their products are not for nuclear, biochemical or military use, but the review period might be extended to 10 to 15 business days if there are concerns over the applications.

The official document obtained by Nikkei shows the bureau demanding that every Taiwanese company file an additional export application, regardless of whether its products for ZTE are sensitive high-tech commodities.

The bureau contacted a total of 22 domestic and foreign industry associations and business groups in Taiwan, including the Taiwan Semiconductor Industry Association and the American Chamber of Commerce in Taipei, the document shows.

Recipients are asked to pass the information on to members so that Taiwanese companies are not hit with sanctions for "carelessly" interacting with entities are on the international "blacklist."

Taiwanese suppliers of ZTE include memory chip company Nanya Technology, camera module maker Lite-On Technology, lens provider Largan Precision and MediaTek.

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