USA have trade sanction with North Korea and Iran which means if you want to do business with USA you are not allowed to do business with these nations. ZTE broke them by selling equipment of $2.4b value to Iran in 2012. Some how USA found that and wanted to punish by putting ban on ZTE but company asked for cooperation so USA fined it with $1.2b and discipline those individuals who sold devices to Iran.
Why ban on ZTE?
Instead disciplining those individual, ZTE gave them bonuses and USA found out and wanted to punish ZTE harder and put 7 years trade ban on it which means no USA company is allowed for 7 years to do trade with ZTE.
Let see what a company needs to manufacturer a phone they need Storage or memory, Display protection, SoC or processors, Patents and Operating System.
Storage or Memory:
There are few major memory manufacturers like Micron, Sandisk, Samsung and Taiwani company called TMSC. Micros and Sandisk are USA company so no more supplies from these companies so ZTE is left with only 2 providers Samsung and TMSC so ZTE have to pay higher price du to competition.
SoC Or Processor:
You can really count the SoCs on your fingertips these are Qualcomm, MediaTek, Samsung’s Exynos, Huawei’s Kirin, Spreadtrum. Qualcomm as USA company so no Qualcomm for ZTE, they can opt for MediaTek (MTK) but recently Taiwan government issued order to end trading with ZTE temporarily.
Display Protection – Glass:
There are only two manufacturers who manufacture glass like Corning and Asahi. Corning manufactures Gorilla Glass and Asahi manufactures Dragontail. So ZTE can not get Corning Gorilla Glass as it is an American company, so they can get only Asahi Dragontail.
Taiwan ordered manufacturers to end supplies for ZTE
There major patents registered by Intel, Qualcomm and Broadcom and all of these are USA companies so ZTE have to get their own patents.
Major mobile operating system is Android by Google so ZTE is not allowed to use Android or atleast Google Services, and without GSM phone is dead as Google Services are required, so ZTE can only use AOSP an Android variant without google services. so no more Google certification for ZTE phones as well
Only AOSP for ZTE so no more Google Services
ZTE gave up Chinese market in the favor of Europe and USA market and penetrated very well and build very good brand recognition. After banning ZTE, company is left with very few options, which makes company incompatible and banned in EU and US market.
Chinese market have evolved so much and there are very big player like Xiaomi, VIVO and OPPO are there and i do not see ZTE competing to them.
AOSP on Spreadtrum SoC, No corning gorilla glass or expensive storage and processor from Samsung.
So no more USA or EU market for ZTE and no more supplies from big manufacturers like Qualcomm, Broadcom and Corning, so for storage they have to rely only on Samsung, and for glass on Asahi.
MediaTek already suspended supplies for ZTE so they are left with SoC like Spreadtrum, Exynos so again Samsung. I never heard Huawei sold their kirin to any 3rd party.
Major supplier for ZTE can be only Samsung for SoCs and Storage as TMSC and MediaTek are ordered by government to shut the supplies temporarily. AOSP could be there ultimate option for Operating System so no more Google Services and without Google Services only market they can fit in is China but they with Spreadtrum processor they can’t even compete with small manufacturer who manufacture phone with MTK.
ZTE IS HISTORY