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ZTE Is Banned From Buying Original U.S. Devices And Localization Of Chips Needs To Be Accelerated

May 11, 2018

This sanctions is an extension of the 2016 sanctions incident. As early as March of 2014, the U.S. Department of Commerce had imposed export restrictions on ZTE because ZTE violated the U.S. export control policy on Iran. According to the “New York Times” report, “The U.S. Department of Commerce believes that ZTE is carrying out projects in all five major embargoed countries: Iran, Sudan, North Korea, Syria and Cuba.” After negotiations, ZTE finally admitted that it violated the export controls in 17 years. The policy agreed to pay a fine of 890 million U.S. dollars. Under the agreement, ZTE Corporation promised to dismiss 4 senior employees and impose a reduction on bonuses or penalties on 35 employees. The trigger for the U.S. Department of Commerce to activate the 7-year-old sanctions ban is that ZTE has not punished or reduced the bonus of 35 employees.


    Many US technology companies have also been affected by this news. Affected by the news that ZTE was sanctioned, foreign related suppliers were also hurt. US optical interconnect provider Acacia Communications shares fell by 34.7%. It provides high-speed fiber-optic transmission equipment for applications such as data centers, subways, and long-distance telecommunications networks. 30% of its revenue comes from ZTE; oclaro, a laser equipment supplier, drops 15.18%, and ZTE takes up its share. The proportion of operating revenue was approximately 18%; in addition, suppliers of optical communication-related components such as Lumentum, Finisar, and Neophotonics also experienced different degrees of decline. It can be said that the U.S. Department of Commerce’s decision on the sanctions has a relatively large negative impact on related companies in the communications industry in both China and the United States.


    At present, key devices are basically completely dependent on imports, and localization of chips needs to be accelerated. Compared with the United States and other leading international standards, the current domestic chips have a big gap, and the national yield of base station chips is almost zero. They basically rely on imports for key technologies such as PLL, ADC/DAC, RF, and high-speed optical communication interfaces. . At present, only main-processor products such as FPGAs can replace domestic products, and low-end chips in the field of optical communications can achieve partial self-sufficiency, but optical modules with more than 100G still have no domestic-made solutions. As long as some of the chips in the base station are embargoed by the United States, the entire base station needs to be redesigned, and it takes more than one year from design to mass production. The U.S. Department of Commerce’s sanctions against ZTE once again sounded a warning to the mainland chip industry, and the localization of chips needed to be accelerated. We believe that this incident will have a greater impact on domestic chip designers and manufacturers, but at the same time it will boost its efforts to increase independent research and development. Domestic manufacturers are expected to increase funding and talent introduction efforts, and do a good job in patent protection and other related issues. Measures.

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