China’s ZTE Delays Annual Results To Assess Impact From New US Restrictions

Chinese telecommunications major ZTE Corp. said Thursday it would delay releasing its annual results until it assessed the impact of U.S. export restrictions placed on it last week. The company is still in talks with the U.S. Commerce Department over alleged violations of U.S. sanctions on Iran, a Reuters report said, citing a spokesman for China's Commerce Ministry.

The smartphone maker was slapped with export restrictions over allegations of selling phone monitoring equipment to Iran in contravention of U.S. laws. The export restrictions ban U.S. suppliers like Intel and Qualcomm from selling American-made equipment and parts to the Shenzhen-based company. U.S. suppliers to ZTE and its subsidiaries are required to apply for a license for the supply of the components, called a “hard-to-get permit” by the Chinese media.

ZTE’s Hong Kong-listed shares have been suspended since Monday.

The company said it was unable to finalize its annual results "pending a thorough self-assessment on the potential impacts of the restriction measures on the business and operation of the group." The export restriction does not stop ZTE — the fourth largest smartphone seller in the U.S. — from selling handsets in the United States.

The restrictions could disrupt handset production if ZTE sources U.S.-made parts to manufacture its handsets, experts told Reuters.

On Wednesday ZTE’s chairman Hou Weigu had reportedly said that there was “uncertainty as to whether a solution can be achieved.”

Nomura research analyst Huang Leping told the South China Morning Post that since ZTE completed its purchase of U.S. components for its 2016 production schedule at the end of last year, the company and the Chinese government have some time to negotiate a resolution.

“We estimate US-made components accounted for between 10 percent and 15 percent of ZTE’s total bill of materials last year,” Huang said.