ZTE’s chip supply in question after US embargo order

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Photo: Reuters

Chinese phone-maker ZTE, which has been banned for seven years from buying US components amid the escalating trade battle between the United State and China, has entered a critical period over the following two months, Yicai.com reported.

Though the company has not yet responded to the impact of the ban, ZTE has deferred disclosure of the first quarterly report of 2018 and continued the suspension of trading on the Shenzhen and Hong Kong stock market.

However, according to the company’s annual report, the amount of raw material inventory is generally 1/12th of total chip purchases in the current year.

This means that ZTE’s chip inventory can only support about one month’s production. Adding in the supply of its agents, ZTE is expected to continue the current production for just two months.

According to a source close to Broadcom, after the US Commerce Department embargo order was issued, Broadcom immediately stopped chip shipments to  ZTE. Previously, annual purchases involving ZTE were more than US$1 billion.

Meanwhile, Intel officials stated that they have acknowledged the order and will comply with the requirements. ZTE’s core network products, such as media gateways, session controllers and packet gateways, are all based on Intel’s high-speed FPGA chips.

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