SAN FRANCISCO/NEW YORK: China´s ZTE Corp on Wednesday postponed the release of quarterly earnings, saying it needs time to assess the impact of a U.S. order that bans American companies from selling it parts, which could undermine its ability to manufacture equipment.
ZTE, a maker of telecommunications equipment and smartphones, was due to release results on Thursday.
It announced the delay as components makers, wireless carriers, retailers, telecommunications firms and Alphabet Inc´s Google, developer of the Android operating system, sought to clarify how they will be affected by the order, announced on Monday by the U.S. Commerce Department.
"There are a lot of companies around the world scrambling to find out what this means,” said Washington lawyer Tim O'Toole, a sanctions specialist whose clients include companies that have done business with ZTE. "It's rare that you go from A-OK to no transactions overnight." Under the order American companies are banned from selling parts and software to ZTE for seven years. The action followed ZTE´s violation of an agreement reached after it was caught illegally shipping U.S. goods to Iran.
ZTE said its board postponed a meeting to approve the results while it reviews the order. Trading in its shares has been suspended in China since Tuesday. American companies are estimated to provide 25 percent to 30 percent of the components used in ZTE´s equipment. ZTE has not responded to requests to describe how it intends to respond to the ban, which a senior U.S. Commerce official told Reuters is unlikely to be lifted.
"I never say never," the official said earlier this week. "We're going to have to see how this unfolds. But there is no provision currently for that to occur. "The Commerce Department initially banned U.S. companies from selling to ZTE in 2016 after the Chinese company was caught shipping equipment with U.S. components to Iran in violation of U.S. export controls. ZTE then received a special temporary general license that was extended several times, until it pleaded guilty to the charges in March 2017 and Commerce suspended the ban through March 2018.Washington has not included any "off ramp" under the terms of this week´s order, the official said.