US President Donald Trump’s Twitter mandate to his government to help ZTE out of their problems has finally been heeded. After being served a ban on doing business with US companies as punishment for their economic embargo violations, the Chinese OEM can now breathe easy as they signed a new deal with the US government. The company’s shares immediately surged after this was announced and as soon as certain conditions have been met, they will be able to get their supplies from US businesses that they previously dealt with.
Because ZTE complied with some of the conditions that the US government has set forward, then the agreement pushed forward, allowing them to finally conduct business with their US-based suppliers. One of the conditions was that they appoint a new chairman and let go of their current board members, which they willingly did for the sake of their business’ survival. They signed an escrow agreement with the Department of Commerce and would need to deposit $400 million, which some say would be done within the day.
That’s a small amount compared to the $3 billion that they lost during the ban that lasted a month and prevented them from getting chips and other components that were sourced in the US and that were essential to the production of their networking gear and smartphones. Not surprisingly, shares of the company surged once news got out, going as high as 24% in Hong Kong. The shares are actually working on a temporary waiver which will expire on August 1, but will most likely be extended.
The Department of Commerce for its part said that while the now-suspended 10-year denial order will no longer be implemented, they still believe that it will set a precedent in that “bad actors” will be deterred from doing the country harm.
VIA: Bloomberg
