ZTE has suspended trading in its shares on the Hong Kong as Shenzhen stock exchanges, after it emerged that the U.S. was about to place export restrictions on the Chinese telecoms equipment firm.
The restrictions, reported by Reuters, will force ZTE’s suppliers to apply for a special license before they can sell U.S.-made products to ZTE. They follow from a Commerce Department investigation into ZTE’s own export-control violations (again reported by Reuters, back in 2012) stemming from sales to Iranian telco TCI.
ZTE did not explain the suspension of its shares on the Chinese stock exchanges on Monday, and in a statement it claimed it is maintaining “constant communication” with U.S. government departments over their concerns.
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“ZTE will continue with normal operations while conducting comprehensive assessments and will be actively communicating with stakeholders,” the firm said. “As a responsible business, ZTE strives to ensure all operational activities adhere to international trade practices and the laws and regulations of host countries.”
The company sells around 8-10% of the world’s telecoms equipment, according to Nomura, which also noted that 10-15% of ZTE’s components come from U.S.-based vendors. These include suppliers such as Qualcomm(QCOM) and Altera.
According to the Financial Times, ZTE has already procured the U.S.-made parts it needs for this year, but—depending on the scope of the restrictions, to be revealed Tuesday—it could face longer-term supply-chain issues.
Meanwhile, the Chinese government has expressed anger over the reports, saying it is “opposed to the U.S. citing domestic laws to place sanctions on Chinese enterprises.”
