ZTE was given a lifeline by the U.S government a couple of weeks back by lifting the ban earlier placed on the sale of US technology to the company. It has now emerged that it isn’t going to be a rollercoaster ride for the Chinese company as the lifting of the ban was tied to several conditions. One of the conditions, according to a source familiar with the matter is that ZTE will need to re-brand its smartphone division.

As it stands, ZTE will need to change the name of its smartphone business. That means dropping the name ZTE from the smartphone brand in order to distinguish it from its network infrastructure business. The reason given for this directive is that the authorities still don’t trust the Chinese firm’s network business and considers it as a threat to national security. On the other hand, the company’s smartphones enjoy some level of trust since they make use of US-owned technologies such as Qualcomm’s processors and are thus, safe to use.

Related: US government reaches an agreement with China’s ZTE Corp to lift ban

Recall that Huawei’s phones were discouraged from being used in the U.S because the technology onboard like the Kirin chipset is owned by the Chinese giant. As a result, the U.S government and her agencies believe Huawei phones can be used to spy on U.S citizens. In this case, ZTE doesn’t seem to have much of an option than to comply since they depend on US carriers to sell most of their devices in the country. Additionally, the company will need to restructure the management team for its consumer business, stationing the new management team outside of China. One wonders the new name the company would adopt after the rebranding. Perhaps, you could suggest one you consider fitting for the longstanding brand. Do well to drop your thoughts in the comment section.

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Earlier this year, the U.S. government banned American firms from sales to ZTE for seven years. According to the U.S. Government, the step was taken because the company had failed to comply with a settlement related to ZTE shipping U.S.-made goods to Iran in violation of U.S. sanctions.

At the time, ZTE Corp issued a statement claiming that the U.S. ban will severely impact its survival and now it seems that the company is really finding it difficult to survive this ban. The China-based company has announced that it has ceased its main business operations to the ban issued by the United States.

The company further revealed that it is trying to figure out the best way forward. Recently, the company had announced that it has decided to more than double its investment for the Research & Development compared to what it spent on the same last year.

The development was in line with the company’s plan to support its ambitious goal of leading the 5G development. The company’s R&D expenditure last year stood at 12.96 billion yuan, which accounted for about 11.9 percent of the company’s operating revenue.

According to various reports, the company will specifically Research & Development investments for the products such as Pre-5G, 5G, high-end routers, SDN, OTN, and core chips.

Meanwhile, ZTE Corp has submitted an application to the U.S. Commerce Department’s Bureau of Industry and Security (BIS) seeking for the suspension of a business ban. While it is not clear what the company included in the application, the company has provided additional material at the BIS’s request.

Ordinarily, ZTE has no administrative appeal rights under agency regulations but the Commerce Department has reportedly agreed to hear the company’s appeal on an informal basis. While some analysts are positive the issue would eventually be resolved without ZTE serving the ban, some see the imbroglio as a negotiating tactic as both countries try to end a trade war initiated by the U.S.

Read More: Pentagon Bans Sales of Huawei And ZTE Devices on U.S Military Bases

The Taiwanese government has also ordered all of its companies that sell to ZTE Corp to suspend shipments until they obtain approval. MediaTek, a mobile chipset maker based in Taiwan, applied for the same and has been granted approval to sell components to ZTE Corp.

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Chinese smartphone and telecommunication equipment manufacturer, ZTE was recently slammed with a seven years ban which prevents it from receiving U.S exports. The ban is supposed to expire in March 2025 but ZTE doesn’t intend to serve the ban. That’s because it is most likely that the company’s smartphone division would be dead by the time the ban elapses.  Instead, ZTE has applied to the U.S Commerce Department, seeking to have the ban suspended.

According to Reuters, the Chinese company disclosed in a filing to the Shenzhen stock exchange on Sunday that it has submitted an application to the U.S. Commerce Department’s Bureau of Industry and Security (BIS) for the suspension of the business ban. Ordinarily, ZTE has no administrative appeal rights under agency regulations but the Commerce Department has reportedly agreed to hear the company’s appeal on an informal basis. ZTE had rejected the ban, stating that it threatened its existence. The company also disclosed that it would take legal action. That may likely be the last resort if the appeal fails to sail through.

ZTE was first fined $1.19 billion in 2017 by the Commerce Department for selling goods and services to Iran and North Korea. Additionally, the company was banned from receiving U.S. exports for seven years, although there was a stay of execution on that part of the punishment as long as ZTE wrote those involved a letter of reprimand and withheld their bonus payments. Unfortunately, ZTE didn’t comply but lied they did, leading to the enforcement of the U.S. exports ban until March 2025.

Read Also: Pentagon Bans Sales of Huawei & ZTE Devices on U.S Military Bases

Some analysts are positive the issue would eventually be resolved without ZTE serving the ban. Some see the imbroglio as a negotiating tactic as both countries try to end a trade war initiated by the U.S.  U.S sparked off the trade war intentionally by imposing a 25% tariff on more than 1,300 imported products from China in order to close up the huge trade deficit that the U.S. has with China. In retaliation, China has proposed a similar tariff on U.S. imports.

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Chinese OEMs are usually keen to enter the U.S market with their products due to the lucrative outlook of the market. Huawei and ZTE are arguably the two Chinese companies that have found success in the U.S market. Huawei’s success is hinged on its telecom equipment business while ZTE supplies telecommunication equipment and also does well in its smartphone business. Huawei’s effort to launch its smartphones in the U.S has faced several hurdles especially bothering on security. U.S authorities believe the Chinese government could compel both companies to disclose sensitive data collected from consumers in the U.S.

That mistrust took a different dimension on Tuesday when the directors of six top U.S intelligence organizations, including the Central Intelligence Agency (CIA), Federal Bureau of Investigation (FBI) and National Security Agency, told the Senate Intelligence Committee that they would not recommend private citizens to use products, including smartphones) from ZTE and Huawei. The U.S security chiefs made this known while testifying before the Senate Intelligence Committee.  Earlier this year, two Senators proposed a bill that would effectively prevent government agencies from using any telecommunications equipment from Huawei and ZTE. Both the intelligence chiefs and Senators cited spying concerns as the reason for the recommended boycott.

Read More: Huawei P20’s March 27 Launch Invitation Out & It Points At Triple Rear Cameras

However, ZTE has responded by dismissing all espionage allegations raised against the company. The Chinese firm reiterated its earlier stance that all such accusations are baseless and vowing to continue focusing on improving the overall security of its products offered in the United States. In a statement provided to Xinhua, a ZTE spokesperson said the firm is fully committed to justify the trust of its customers and is entirely compliant with any applicable laws and regulations in all foreign markets in which it operates, including the U.S. Besides doing business in a law-abiding manner, ZTE is also subjecting its hardware and technologies to “strict testing protocols” and is always aiming to operate in accordance with “the highest business standards,” the company concluded.

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