ZTE may have just gone from being a serious contender in the high-stakes world of next-generation networking to - quite possibly - a mobile industry washout.
China’s second-largest telecommunications gear-maker was preparing to lead the country’s charge into the era of blazing fast fifth-generation wireless technology, along with local rival Huawei Technologies. Instead, ZTE ran afoul of Washington for the second time in a year, inciting a moratorium on purchases from US suppliers and suffering a devastating blow to its global ambitions.
It couldn’t have happened at a worse time. ZTE finds itself grappling with life-threatening sanctions once more just as major wireless carriers prepare to roll out 5G networks worldwide. The US government slapped a seven-year ban on its purchase of components from American companies for ignoring promises made in 2017 to resolve a sanctions dispute - then lying about it.
The moratorium threatens a swathe of components needed to hawk gear to clients like China Mobile and Europe’s Telefonica. The Chinese firm relies on suppliers from Qualcomm and Micron Technology to Lumentum and Acacia Communications for optical components and chipsets in the equipment and smartphones it sells globally.
“Even if this doesn’t kill them, ZTE will be half-dead,” said Qian Kai, an analyst with brokerage CICC.
ZTE’s best hope may be for swift intervention to resolve the dispute from Beijing - but that is a long shot given rising tensions between the US and China. President Donald Trump has threatened tariffs on $150 billion of Chinese imports in retaliation for alleged violations of intellectual property rights, while Beijing has vowed to retaliate on everything from American soya beans to planes.
Following the ZTE ban, China’s Ministry of Commerce on Tuesday said it would take necessary measures to protect the interests of its companies. And ZTE said it was aware of the sanctions and evaluating their impact. Its shares were suspended from trade in Hong Kong and Shenzhen.
US-made components account for only 10 to 15 per cent of ZTE’s production costs, estimates Nomura analyst Joel Ying. “But these are essential parts that aren’t easily replaced,” he said. ZTE’s smartphones, for instance, rely on Qualcomm’s chips. “At least for the next five to 10 years, ZTE can’t exist without American companies.”
Things seemed to be going well for ZTE. A year ago, it appeared to mollify a US Commerce Department incensed over illegal exports to Iran by agreeing to pay a fine of up to $1.2bn and punish wayward staff. ZTE’s market value doubled over the past year, and consumer division chief Cheng Lixin spoke openly about breaking into Apple’s home turf. And 5G spending looked like a tremendous boon: Chinese carriers alone are expected to spend $538bn on networks from 2018 to 2025, Jefferies estimates.
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Read more:
China tech discrimination by US is hurting all sides
Trump security team sees building US 5G network as option
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Then the US issued its ban, charging that instead of punishing employees for violating sanctions ZTE had paid them full bonuses. US optical suppliers such as Acacia and Lumentum dived, while greater China partners also plummeted.
Analysts delivered a flurry of downgrades on concern ZTE will miss out on future business. The 5G networks are supposed to usher in artificial intelligence, virtual reality and other bleeding-edge applications.
The ban “will likely cause ZTE to lose market share in both transmission and handsets”, Edison Lee, an analyst with Jefferies, wrote Tuesday. “Expect another settlement with the US to take 3 to 5 months. But customer confidence outside China will take longer to restore, especially potential 5G customers.”
The ban comes days after President Xi Jinping called on the US to allow Chinese companies to buy more high-tech products from American companies - whittling away at a ballooning trade surplus. Now, a potential victim could be Qualcomm: Chinese anti-trust regulators are reviewing its proposed NXP Semiconductors acquisition, CICC reminded investors.
ZTE could try sussing out alternatives in Japan, Korea or Taiwan for certain non-essential components. But it depends on the US for top-notch processors such as high-speed analog-to-digital converters and communications chips, according to Roger Sheng, an analyst with Gartner.
CICC analysts Huang Leping and Wang Xinglin estimate ZTE harbours about one to two months of inventory, after which the US sanctions will begin to bite. But for now, ZTE’s woes represent a boon for larger rival Huawei, which remains unfettered by similar restrictions.
Together, they rank among the world’s largest providers of networking equipment and are active across Europe and Asia - less so in the US, where the government remains suspicious of their alleged government connections. Both have dismissed such accusations. CICC estimates ZTE commands about a 10 per cent share of the global telecoms equipment market, and 30 per cent of China. Huawei could now take advantage of the uncertainty surrounding its competitor.
But the troubles for both companies may not be over. The US Federal Communications Commission on Tuesday plans to consider a ban on networking equipment from companies including ZTE and Huawei.
Voy! Voy! Voy!
Director: Omar Hilal
Stars: Muhammad Farrag, Bayoumi Fouad, Nelly Karim
Rating: 4/5
Company Profile
Name: Direct Debit System
Started: Sept 2017
Based: UAE with a subsidiary in the UK
Industry: FinTech
Funding: Undisclosed
Investors: Elaine Jones
Number of employees: 8
Zayed Sustainability Prize
3 Body Problem
Creators: David Benioff, D B Weiss, Alexander Woo
Starring: Benedict Wong, Jess Hong, Jovan Adepo, Eiza Gonzalez, John Bradley, Alex Sharp
Rating: 3/5
The Cockroach
(Vintage)
Ian McEwan
$1,000 award for 1,000 days on madrasa portal
Daily cash awards of $1,000 dollars will sweeten the Madrasa e-learning project by tempting more pupils to an education portal to deepen their understanding of math and sciences.
School children are required to watch an educational video each day and answer a question related to it. They then enter into a raffle draw for the $1,000 prize.
“We are targeting everyone who wants to learn. This will be $1,000 for 1,000 days so there will be a winner every day for 1,000 days,” said Sara Al Nuaimi, project manager of the Madrasa e-learning platform that was launched on Tuesday by the Vice President and Ruler of Dubai, to reach Arab pupils from kindergarten to grade 12 with educational videos.
“The objective of the Madrasa is to become the number one reference for all Arab students in the world. The 5,000 videos we have online is just the beginning, we have big ambitions. Today in the Arab world there are 50 million students. We want to reach everyone who is willing to learn.”
Jebel Ali results
2pm: Handicap (PA) Dh 50,000 (Dirt) 1,400m
Winner: AF Al Moreeb, Antonio Fresu (jockey), Ernst Oertel (trainer)
2.30pm: Maiden (TB) Dh 60,000 (D) 1,400m
Winner: Shamikh, Ryan Curatolo, Nicholas Bachalard
3pm: Handicap (TB) Dh 64,000 (D) 1,600m
Winner: One Vision, Connor Beasley, Ali Rashid Al Raihe
3.30pm: Conditions (TB) Dh 100,000 (D) 1,600m
Winner: Gabr, Sam Hitchcott, Doug Watson
4pm: Handicap (TB) Dh 96,000 (D) 1,800m
Winner: Just A Penny, Sam Hitchcock, Doug Watson
4.30pm: Maiden (TB) Dh 60,000 (D) 1,600m
Winner: Torno Subito, Sam Hitchcock, Doug Watson
5pm: Handicap (TB) Dh 76,000 (D) 1,950m
Winner: Untold Secret, Jose Santiago, Salem bin Ghadayer
TECH SPECS: APPLE WATCH SE (second generation)
Display: 40mm, 324 x 394; 44mm, 368 x 448; Retina LTPO OLED, up to 1000 nits; Ion-X glass
Processor: Apple S8, W3 wireless
Capacity: 32GB
Memory: 1GB
Platform: watchOS 9
Health metrics: 2nd-gen heart rate sensor, workouts, fall/crash detection; emergency SOS, international emergency calling
Connectivity: GPS/GPS + cellular; Wi-Fi, LTE, Bluetooth 5.3, NFC (Apple Pay)
Durability: Water resistant up to 50m
Battery: 269mAh Li-ion, up to 18h, wireless charging
Cards: eSIM
Finishes: Aluminium; midnight, silver, starlight
In the box: Watch SE, magnetic-to-USB-C charging cable, band/loop
Price: Starts at Dh999 (40mm) / 1,119 (44mm)
The specs: 2018 Maxus T60
Price, base / as tested: Dh48,000
Engine: 2.4-litre four-cylinder
Power: 136hp @ 1,600rpm
Torque: 360Nm @ 1,600 rpm
Transmission: Five-speed manual
Fuel consumption, combined: 9.1L / 100km
THE SPECS
Engine: 3.6-litre V6
Transmission: nine-speed automatic
Power: 310hp
Torque: 366Nm
Price: Dh200,000
BULKWHIZ PROFILE
Date started: February 2017
Founders: Amira Rashad (CEO), Yusuf Saber (CTO), Mahmoud Sayedahmed (adviser), Reda Bouraoui (adviser)
Based: Dubai, UAE
Sector: E-commerce
Size: 50 employees
Funding: approximately $6m
Investors: Beco Capital, Enabling Future and Wain in the UAE; China's MSA Capital; 500 Startups; Faith Capital and Savour Ventures in Kuwait
Titanium Escrow profile
Started: December 2016
Founder: Ibrahim Kamalmaz
Based: UAE
Sector: Finance / legal
Size: 3 employees, pre-revenue
Stage: Early stage
Investors: Founder's friends and Family
Company Profile
Name: Takestep
Started: March 2018
Founders: Mohamed Khashaba, Mohamed Abdallah, Mohamed Adel Wafiq and Ayman Taha
Based: Cairo, Egypt
Sector: health technology
Employees: 11 full time and 22 part time
Investment stage: pre-Series A
INDIA'S TOP INFLUENCERS
Bhuvan Bam
Instagram followers: 16.1 million
Bhuvan Bam is a 29-year-old comedian and actor from Delhi, who started out with YouTube channel, “BB Ki Vines” in 2015, which propelled the social media star into the limelight and made him sought-after among brands.
Kusha Kapila
Instagram followers: 3.1 million
Kusha Kapila is a fashion editor and actress, who has collaborated with brands including Google. She focuses on sharing light-hearted content and insights into her life as a rising celebrity.
Diipa Khosla
Instagram followers: 1.8 million
Diipa Khosla started out as a social media manager before branching out to become one of India's biggest fashion influencers, with collaborations including MAC Cosmetics.
Komal Pandey
Instagram followers: 1.8 million
Komal Pandey is a fashion influencer who has partnered with more than 100 brands, including Olay and smartphone brand Vivo India.
Nikhil Sharma
Instagram followers: 1.4 million
Nikhil Sharma from Mumbai began his online career through vlogs about his motorcycle trips. He has become a lifestyle influencer and has created his own clothing line.
Source: Hireinfluence, various
EMIRATES'S REVISED A350 DEPLOYMENT SCHEDULE
Edinburgh: November 4 (unchanged)
Bahrain: November 15 (from September 15); second daily service from January 1
Kuwait: November 15 (from September 16)
Mumbai: January 1 (from October 27)
Ahmedabad: January 1 (from October 27)
Colombo: January 2 (from January 1)
Muscat: March 1 (from December 1)
Lyon: March 1 (from December 1)
Bologna: March 1 (from December 1)
Source: Emirates
WE NO LONGER PREFER MOUNTAINS
Director: Inas Halabi
Starring: Nijmeh Hamdan, Kamal Kayouf, Sheikh Najib Alou
Rating: 4/5
COMPANY PROFILE
Company name: ASI (formerly DigestAI)
Started: 2017
Founders: Quddus Pativada
Based: Dubai, UAE
Industry: Artificial intelligence, education technology
Funding: $3 million-plus
Investors: GSV Ventures, Character, Mark Cuban
J Street Polling Results
97% of Jewish-Americans are concerned about the rise in anti-Semitism
76% of US Jewish voters believe Donald Trump and his allies in the Republican Party are responsible for a rise in anti-Semitism
74% of American Jews agreed that “Trump and the Maga movement are a threat to Jews in America"
SPECS
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now