‘Extremely Unfair.’ China’s ZTE Is Furious Over a Ban on Buying U.S. Tech for Seven Years

April 20, 2018, 6:38 AM UTC
This photo taken on April 19, 2018 shows the ZTE logo on a building in Nanjing in China's eastern Jiangsu province.
AFP/Getty Images

China’s ZTE (ZTCOY) blasted the U.S. government decision to impose a seven-year ban on its purchases of crucial American components, calling the move “extremely unfair” and “unacceptable.”

The Shenzhen-based communications-equipment maker vowed to protect its rights by legal means without specifying what actions it may take, according to a statement posted on the company’s website. It also said it will continue to resolve the issue through negotiations with the U.S. government.

The forcefully worded statement came days after the U.S. Commerce Department said ZTE had violated the terms of a sanctions settlement and barred the Chinese company from buying any components from U.S. suppliers until 2025. Such a ban would deal a crippling blow to the Chinese company and its aspirations to expand globally.

“The denial order not only severely jeopardizes the survival of ZTE, it also hurts the interests of all the partners of ZTE, including a large number of American companies,” said the company.

The case is adding to rising tensions between China and the U.S. over trade. In response to the ZTE ban, China’s Ministry of Commerce said—twice this week—that it would take necessary measures to protect the interests of its companies. “The action has given way to widespread market concern on the U.S. trade and investment environment,” a spokesman said.

The Chinese firm relies on suppliers from chipmakers Qualcomm (QCOM) and Micron Technology (MU) to optical developers Lumentum Holdings and Acacia Communications (ACIA) The ban may also stop the company from using Google’s Android operating system, the heart of its smartphones.

Shares of ZTE remain suspended in Hong Kong and Shenzhen. Its American Depository Receipts fell 33% on Tuesday after news of the ban, but have recovered some of those losses since.