Those budget-priced ZTE phones are going away
Chinese smartphone maker facing U.S. bans
ZTE, maker of Android phones popular with budget-minded consumers, may be down for the count — at least as far as the U.S. is concerned.
The first blow came last month when the Commerce Department banned American companies from exporting products to the Shenzhen, China-based telecom firm for seven years.
Then on Wednesday the smartphone maker said it would cease “major operating activities,” raising questions not only about its future survival but the effect on U.S. consumers who have already bought or were thinking of buying ZTE phones.
ZTE is one of the few Chinese companies that has seen some success selling phones in the U.S, mainly of lower-cost models.
John Marick, the CEO of Consumer Cellular, a cellphone company that sold entry-level ZTE Android phones to its core customer, an older consumer, says, “We’re obviously watching this very closely and anxiously.”
He says “a lot of our efforts have been around warranties and making sure that if ZTE isn’t able to honor that warranty that we’re able to.”
ZTE has not responded to a USA TODAY request for comment.
According to the Hong Kongbased global research firm Counterpoint, ZTE has the fourth-largest market share among smartphone makers in the United States, behind only Apple, Samsung and LG.
“The abrupt disappearance of the No. 4 smartphone vendor in the U.S. is shocking, but there are plenty of companies that will be able to step in and claim ZTE’s ‘low-price, high-value’ po- sition,” says Avi Greengart, research director for platforms and devices at GlobalData.
He named TCL (Alcatel) and LG as immediate beneficiaries, since they have existing relationships with U.S. carriers. Lenovo (Motorola) and Coolpad will also look to swoop in and grab share, he says.
Though ZTE said in a filing that it “maintains sufficient cash and strictly adheres to its commercial obligations,” it has warned that the ban would “severely impact the survival and development of ZTE” and “also cause damages” to all its partners, including a large number of U.S. companies.
As of Thursday morning, ZTE handsets were still available for sale on Amazon.com and BestBuy.com. Reports indicate, however, that the phones were no longer for sale on ZTE’s own store on Alibaba’s Tmall website.
The Commerce Department ban came down on April 16 when the government accused ZTE of violating the terms of a March 2017 settlement in which ZTE pleaded guilty and agreed to pay $1.19 billion for illegally shipping telecommunications equipment to Iran and North Korea. Separately, lawmakers in the U.S. have placed ZTE and even larger Chinese telecom companies in the crosshairs over their reputed ties to the Chinese intelligence and military establishment.