It is dizzying to see how the sanctions against ZTE for selling phones to Iran and North Korea have caused the collapse of the Chinese company, which is experiencing a very critical situation. As explained in this information released by Reuters. The key to these sanctions is that the Donald Trump government prevents them from trading with US companies.
That for a technology company is extremely serious. In the case of ZTE both for its commercial telecommunications division, but especially for the production of telephones. Although the vast majority of smartphones worldwide are manufactured in China, US hardware and software companies play a key role.
The sanctions affect ZTE, especially when using Qualcomm and Google products
This case has in fact uncovered something tremendously disturbing. The prevailing position of Android worldwide makes the operating system a fabulous tool of pressure for the US administration. Although Android has an open source license, which allows you to use it without affecting the penalties, Google applications are proprietary software.
That means that access to the Play Store is vetoed for ZTE by the sanctions. In China, this paradoxically does not matter. The control policy of the Chinese government regarding this store makes other alternatives. But selling an Android phone outside of China without the Google Play Store is very difficult.
Amazon does it in its Fire tablets, which come equipped with a modified version of Android and with an own application store. But the sales of these tablets are explained by its low price and because it is not excessively complicated to install the Google Apps store on them with a little skill. In addition, it is not the same not to have certain applications in a tablet that in a mobile, whose use is much more intensive.
To understand the scope of what we are talking about, it is worth mentioning that the ZTE website in Spain has closed and the accounts in the social networks of the Spanish subsidiary stopped publishing messages on April 20. Something that is surprising considering that in the last edition of the MWC nothing foreshadowed something like that when we visited its stand at the fair.
The ZTE Spain website has disappeared and its accounts on social networks remain frozen
In any case, the company apparently continues to negotiate with the United States Government to prevent its collapse. This case has uncovered collaterally how dangerous Google’s policy can be. Let’s not forget that this issue has caused friction between the Californian company and the EU. Some frictions precisely caused by the preponderant role of Google applications in the Android operating system.
However, the problem for ZTE is not just about the software. The company is also dependent on the processors of Qualcomm, which is a US corporation. Although there are alternatives in this regard, such as those of MediaTek in Taiwan, it is not easy for a technology company to change its suppliers overnight. In fact, ZTE has not managed to implement these processors to bridge the gap left by Qualcomm.
It is doubtful that ZTE can survive, at least outside of China, because of these sanctions
But aside from the consequences for ZTE not being able to use Google’s software or Qualcomm hardware, there are other aspects that make it extremely difficult to survive in the sector, such as not being able to do business with financial companies in the United States or with suppliers of components and raw materials.
The ZTE crisis will most likely be viewed with concern by another industry giant: Huawei. Do not forget that these two Chinese companies were put in the spotlight of the main security agencies in the United States recently because of the security risks that these companies’ phones could have. Although at no time were specified what kind of risks those were.
ZTE and Huawei were accused by the heads of several US security agencies of selling products that were not completely safe, but no concrete data was provided on this