According to the Wall Street Journal reported on May 21, China and the United States basically reached an agreement on the path to solve the ZTE Corporation issue, and the United States will cancel the ZTE ban. After a few days of intense and negotiating consultations, China and the United States finally reached a consensus of "not fighting the trade war." They also jointly issued a joint statement on the economic and trade consultations on the afternoon of the 19th. The two sides will strengthen economic and trade cooperation in many areas.
The lifting of the ban is undoubtedly of great benefit to ZTE. ZTE previously said that due to the ban, the company's main business has been suspended. Only yesterday evening, ZTE issued an internal letter stating that the lifting of the refusal orders as soon as possible is always the company’s sole goal. This is in line with the common expectations of the country, employees, customers, partners, shareholders, and many others. "We are getting closer to this goal."
The internal call to the company’s employees “needs to strengthen confidence, unite, and be uninterrupted by outside rumors,” and “should be more rational and consider the complexity of the current problem to be solved”.
The lifting of the ban can first allow ZTE to resume business operations as soon as possible. These five weeks may be the most difficult time in ZTE's history. However, ZTE's “precepts and deeds” have enabled it to quickly resume business development and proceed in accordance with the established strategic direction. First, ZTE promised to adhere to commercial credit under the premise of legal compliance, and its courageous corporate culture won the trust of customers in times of crisis. Second, ZTE normally pays employees, recruits 2018 regular students, and 80,000 employees also repays their confidence in the company. They always maintain unity in times of crisis.
The lifting of the ban will also bring significant benefits to ZTE's suppliers and customers. The communications industry is an industry with a high degree of global division of labor. The development of the industry chain is very professional and meticulous. No matter which link is damaged, it will affect the healthy operation of the entire industrial chain. Relevant market data show that ZTE holds a 13% share of the global telecommunications equipment market and accounts for about 30% of the Chinese market. It is the top four in the world, China ranks in the top two telecommunications equipment vendors, and also the top 10 in the world and the fourth in the United States. Large handset manufacturers are an important part of the communications industry chain.
Taking procurement as an example, ZTE annually purchases more than US$2 billion in U.S. purchases, and purchases amounted to US$6 billion per year in the world. The US sanctions on ZTE have greatly affected ZTE's suppliers. For example, Acacia, a US-based silicon photonics technology company, plunged its share price on the day of the announcement of the sanctions. After the release of the joint statement by China and the United States, the stock price rose sharply. From the perspective of customers, ZTE and most of the world's mainstream operators have business partnerships and jointly carry out technological innovations. If the ban is continued for a long time, it will have a negative impact on operators' network construction and technical cooperation. The lifting of the ban is a timely rain for ZTE's global customers.
Lifting the ban will also make ZTE not miss the key node of 5G development. ZTE Corporation, with the flag of "5G Pioneer", continues to make strategic investments. Currently, it is one of the world's major 5G players and an important participant in the development of 5G standards. The data shows that ZTE's 4G LTE standard has more than 815 necessary patents, accounting for the world's total. More than 13%, 5G strategic layout patents exceed 2,000 worldwide. If the ban leads to ZTE’s “absence”, it will inevitably have a negative impact on the development of 5G industry.
It is understood that 3GPP will release 5G non-independent networking standards next month, which means that the 5G standard architecture is basically formed. In addition, the third phase of China's 5G technology R&D trials is also underway. With the lifting of the ban, ZTE can fully participate in 5G technical testing and standard setting work, and initiate a scheduled 5G commercial plan. It is understood that ZTE will continue to increase investment in 5G.
At the regular press conference of the Chinese Ministry of Foreign Affairs on May 22, a spokesperson Lu Hao said that the two sides will start consultations on how to implement the details, and the US will send a high-level delegation to China to conduct specific consultations in the relevant fields. This indicates that Sino-U.S. trade frictions have entered the stage of substantial solution. It is believed that with the cooling and gradual resolution of Sino-U.S. trade frictions, ZTE will eventually weather the crisis. This is undoubtedly a great advantage to U.S. component suppliers and customers. This incident will also promote ZTE to further build a world-class compliance enterprise, grasp its own core technological advantages, share cooperation and benign competition with the industry, and promote the development of the communications industry into a new era of 5G.