ZTE share trading suspended amid reports of U.S. ban on component supply

Trading of ZTE shares on Hong Kong and Chinese stock exchanges was halted on Monday, although it was not clear whether this was in reaction to news that the U.S. Commerce Department plans to implement restrictions on the supply of components to the China-based equipment vendor.

ZTE has yet to explain why trading was halted, but has stated that it is concerned about reports of the planned block on components supply, Reuters reported.

The news agency explained that the restrictions would apply to the supply of U.S.-made components to ZTE, and that the block is due to come into force on Mar. 8. The U.S. proposed the move amid concerns that ZTE breached export controls by supplying equipment to Iran's largest telecoms operator, the Telecommunication Company of Iran, Reuters reported.

In a statement, ZTE told Reuters that it has worked closely with U.S. government departments since 2012 and is "committed to fully address and resolve any concerns."

However, the company also hinted that it has not received formal notification of the block on component supply, telling Reuters that its concern centres on "recent media reports" about the move.

The news agency reported that the U.S. Commerce Department began investigating ZTE regarding the alleged breach of its export controls in 2012. Specifically, the department is probing whether ZTE purchased U.S.-manufactured components via so-called "front" companies to circumvent the export ban.

Analysts at Jefferies told Reuters the proposed ban would have a significant impact on ZTE's supply chain.

The U.S. market has been a tough one for ZTE and fellow China-based equipment vendor Huawei since 2012 when the companies were identified as potential security threats, sister publication FierceWireless explained.

While those concerns have effectively seen Huawei frozen out of the U.S. market since, the company's VP of external affairs in the country recently said there is light at the end of the tunnel as U.S. officials begin focussing more on network hacks than telecoms equipment, FW reported.

For more:
- see this Reuters report
- view this FierceWireless article

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