ZTE Estimated To Have Lost $3.1 Billion From US Technology Ban

It’s been a little more than a month since the U.S. government imposed the seven-year ban on ZTE that disallows the latter from buying crucial American technology and components it needs for its products. And it’s not looking good for the Chinese firm.

Bloomberg revealed Wednesday that ZTE’s estimated losses from the U.S. technology ban have already reached 20 billion yuan or around US$3.1 billion. The losses were a result of the suspended major operations of the company and the fact that its clients have pulled out of deals.

People familiar with the matter disclosed that ZTE has been shelling out around 80 million to 100 million yuan in daily operational expenses even though most of its 75,000 employees sit idle at the moment.

Earlier this month, IBTimes learned that ZTE was struggling to figure out what it should do to its smartphone business. The company reportedly contemplated on whether it should sell the unit because it couldn’t operate normally without the components from the U.S. that are needed in the production of its smartphones.

ZTE has since halted operations of its assembling facilities. It has also pulled all of its phones from a showroom at its headquarters and stopped the sale of its handsets online. It also suspended the sale of its devices via third-party retailers due to the current state of its business.

Nevertheless, ZTE is still hopeful that things could change for the better when it strikes a deal soon. Insiders said the Chinese firm has already come up with a plan that would swing its idled factories into action within hours once the Trump administration has agreed to lift the ban on purchases of American chips and components.

The insiders divulged that thousands of ZTE’s workers are on standby in their dormitories and are prepared to flood the factories once a settlement between the company and the government is reached. Reshuffling executives and the board is also expected to happen once an agreement is made. ZTE declined to comment on the leaked information.

Even though Trump revealed last week that he was looking to reverse the ban, ZTE still has one big obstacle to deal with before it could get back to business. More than two dozen senators signed a letter on Tuesday urging Trump’s administration to stick with the original plan of punishing ZTE for violating U.S. sanctions, according to Vox.

The senators maintained in their letter that the administration should “protect national security interests” while having trade talks with Beijing. They also urged Trump and his administration to not make any concessions that could compromise the country’s security interests.