ZTE protests US penalty, says it is seeking solution

BEIJING (AP) — ZTE Corp., one of China’s biggest tech companies, warned Friday that a ban on access to U.S. technology threatens the company’s survival and said it is looking for a legal solution.

Washington imposed the ban Monday in a case involving exports of telecoms equipment to Iran and North Korea. U.S. companies are barred from selling technology to stateowned ZTE for seven years.

That could handicap ZTE’s smartphone business, which uses Google Inc.’s Android system, and crimp a multibillion-dollar revenue flow to companies such as Qualcomm Inc. that supply chips, software and other technology.

ZTE pleaded guilty in March 2017 and agreed to pay a $1.19 billion penalty for shipping equipment to Iran and North Korea in violation of U.S. regulations. The company promised to discipline employees involved in the scheme, but the U.S. Commerce Department said this week they were paid bonuses instead.

A ZTE statement complained U.S. authorities imposed “the most severe action” without waiting for an investigation and corrective measures to be completed.

The penalty “not only threatens ZTE’s existence but also harms the interests of ZTE’s business partners, including a large number of U.S. companies,” said the statement.

“ZTE will not give up its efforts to solve problems through communication and dialogue. It is determined to safeguard its legitimate rights and interests through all legally permitted means,” the company said.

The statement gave no indication what legal steps ZTE might take.

ZTE is, along with telecoms rival Huawei Technology Ltd. and computer maker Lenovo Group, among the first Chinese companies to compete in global technology markets.

The company, headquartered in the southern city of Shenzhen, operates in 160 countries and sells switching gear used by phone and internet companies, handsets and other products.

The company reported 2017 global revenue of 108.8 billion yuan ($17.3 billion).

ZTE and Huawei have been shut out of the U.S. market for switching gear since a congressional panel in 2012 labeled them security threats.

The company can keep using Android, for which Google charges no fee, but might lose access to applications such as Google Maps, Gmail and Youtube, according to according to IDC analyst Kiranjeet Kaur.

“If ZTE cannot have these Google applications, ZTE phones will be a lot less attractive,” said Kaur.

Its smartphones also have “high dependence” on Qualcomm application processors, according to Kaur.

Qualcomm didn’t immediately respond to an email seeking comment. Intel Corp., another chip supplier, declined to comment.

South Korea (AP) — Shares are lower in Asia after a major supplier to Apple forecast continued weak demand for mobile devices. A warning by the head of the IMF over the potential for trade tensions to harm global growth also weighed on sentiment.

KEEPING SCORE: Japan’s Nikkei 225 edged 0.1 percent lower to 22,183.05, shedding early gains. South Korea’s Kospi lost 0.3 percent to 2,478.38 while Hong Kong’s Hang Seng index fell 0.4 percent to 30,579.54. The Shanghai Composite Index slumped 1.2 percent to 3,080.01. Australia’s S&P/ASX 200 retreated 0.2 percent to 5,870.10. Stocks in Taiwan, Singapore and Indonesia also declined.

APPLE SUPPLIERS: Taiwan Semiconductor Manufacturing Co. plunged 5.5 percent in Taiwan after the key Asian Apple supplier gave a lower-than-expected revenue forecast for the second quarter of $7.8 billion-$7.9 billion. The company predicted demand in the mobile sector would remain weak. Other Apple suppliers also traded lower. South Korea’s LG Display Co. lost 0.8 percent and Samsung Electronics Co., tumbled 1.7 percent.

ANALYST’S TAKE: Weak guidance from Taiwan Semiconductor Manufacturing Co., a major supplier to Apple, brewed concerns of weak iPhone demand, dragging technology shares lower, Jingyi Pan, a market strategist at IG in Singapore, said in a commentary. “The corresponding impact would certainly be watched into the Asian session today with the supply chain sprawled across the region.”

TRADE: The head of the International Monetary Fund, Christine Lagarde, is urging countries to work out their differences over trade and take advantage of the healthy world economy to reduce debt before the next downturn comes. Speaking as the IMF and World Bank began their spring meeting, Lagarde warned against complacency: “More needs to be done to sustain this upswing and foster long-term growth,” she said.

WALL STREET: U.S. stock markets finished lower on Thursday, ending a three-day winning streak for the market as technology and consumer products companies went sour. The S&P 500 index fell 0.6 percent to 2,693.13. The Dow Jones industrial average slid 0.3 percent to 24,664.89. The Nasdaq composite lost 0.8 percent to 7,238.06. The Russell 2000 index of smallercompany stocks gave up 0.6 percent to 1,573.82.

OIL: Benchmark U.S. crude lost 1 cent to $68.32 per barrel on the New York Mercantile Exchange. The contract lost 14 cents to finish at $68.33 per barrel on Thursday. Brent crude, used to price international oils, added 2 cents to $73.80 per barrel in London. On Thursday, it rose 30 cents to close at $73.78 per barrel in London.