US sanctions may block China's ZTE from Android OS

Trade war escalation sees Huawei move to abandon US market

Chinese smartphone manufacturers could face ruination after the introduction of new US sanctions that US companies from buying goods from providers deemed to pose a risk to national security.

The US Commerce Department announced earlier this week that it would be barring US technology companies from selling parts to Chinese manufacturer ZTE after the company admitted to having secretly orchestrated deals with Iran, a country currently under US sanctions.

However, under additional rules announced on Tuesday, US firms will also be restricted from buying goods from companies that may pose a risk to national security and US telecoms providers.

It's the latest move in an ongoing trade dispute between the two economic superpowers that has already seen the introduction of substantial tariffs, and threats of a potential trade war.

The decision effectively shuts out ZTE, as well as rival Chinese smartphone manufacturer Huawei, from operating within the US market.

Advertisement - Article continues below
Advertisement - Article continues below

The National Cyber Security Centre here in the UK has expressed similar concerns about Chinese state-owned ZTE and has warned telecommunications companies against doing deals with the company.

"NCSC assess that the national security risks arising from the use of ZTE equipment or services within the context of the existing UK telecommunications infrastructure cannot be mitigated," said Dr Ian Levy, technical director of the NCSC.

To make matters worse, it's possible that Google's Android operating system falls under the US sanctions levied against ZTE, potentially cutting off the company from principal software used in its smartphones.

ZTE lawyers are reportedly meeting with Google executives to discuss the issue, according to a source familiar with the matter, speaking to Bloomberg. The source also indicated the company is looking at different software options in the event it's denied access to Android.

It's believed that the wider sanctions could prove particularly disastrous for ZTE, which currently sources as much as 30% of its parts from US technology companies, such as semiconductor giant Qualcomm.

Advertisement - Article continues below

However, while Tuesday's restrictions do not specify which companies pose a risk to national security, it's likely that Huawei, ZTE's rival in China, will also be affected.

Huawei has taken a bullish stance in response, as the company is reportedly preparing to cut its losses and ditch the US market outright, according to a report by the New York Times. Five US C-level employees have been laid off, including vice president and lobbyist William Plummer, an anonymous source indicated.

"Some things cannot change their course according to our wishes," said Huawei's deputy chairman Eric Xu, cited by the NYT. "With some things, when you let them go, you actually feel more at ease."

IT Pro has contacted Huawei and ZTE for confirmation of its actions.

While Huawei may be able to recover, ZTE is far more reliant on US tech. There are simply too few alternatives to Google's Android, particularly given Microsoft's decision to abandon development on its own operating system. In order to survive, it's possible the company will need to sink substantial investment into the development of its own software.

Image: Shutterstock

Featured Resources

What you need to know about migrating to SAP S/4HANA

Factors to assess how and when to begin migration

Download now

Your enterprise cloud solutions guide

Infrastructure designed to meet your company's IT needs for next-generation cloud applications

Download now

Testing for compliance just became easier

How you can use technology to ensure compliance in your organisation

Download now

Best practices for implementing security awareness training

How to develop a security awareness programme that will actually change behaviour

Download now

Most Popular

data governance

Brexit security talks under threat after UK accused of illegally copying Schengen data

10 Jan 2020
Microsoft Windows

Memes and Viking funerals: The internet reacts to the death of Windows 7

14 Jan 2020

Openreach offers free full-fibre installation for thousands of homes

14 Jan 2020

Microsoft to patch ‘extraordinarily serious’ cryptographic flaw

14 Jan 2020