In a major reversal of the country’s prior position, U.S. President Donald Trump pledged to put Chinese telecom equipment giant ZTE “back in business fast” on Twitter Sunday, adding: “too many jobs in China lost.”
It’s a conciliatory move as the U.S. President seeks to negotiate terms with China and avert a trade war.
President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!
— Donald J. Trump (@realDonaldTrump) May 13, 2018
But it’s not that ZTE that has something to gain following Trump’s reversal in tone on the U.S. Commerce Department ban. The Commerce Department previously banned U.S. parts makers from selling their goods to ZTE, saying ZTE had broken an earlier agreement on Iranian sanctions.
But it’s not that ZTE that has something to gain following Trump’s reversal in tone on the U.S. Commerce Department ban. The Commerce Department previously banned U.S. parts makers from selling their goods to ZTE, saying ZTE had broken an earlier agreement on Iranian sanctions.
And while the Nasdaq Composite was relatively flat, shares of other fiber optics makers also rose. Shares of Oclaro, which derives about a sixth of its revenue from ZTE, fell about 5%. NeoPhotonics, which also does business with ZTE, saw shares fell 4%.
Such firms may have even more to lose should the Chinese-U.S. trade talks fail to materialize. Fiber optics makers increasingly depended on Chinese firms for business in recent years, as the country embraces tech. NeoPhotonics, for example, says that China accounted for 55% of its revenue in 2017.
“Fiber optics telecommunication growth in China is an important contributor to our success,” NeoPhotonics said in its 2017 annual earnings filing. “We expect a major portion of our revenue to come from China infrastructure spending in wireline and wireless networks.”
Still, even if fiber optics firms do come out of the current ban against selling to ZTE unscathed, larger threats are on the horizon.
