ZTE of China to Pay $1B Fine in Deal to End U.S. Sanctions

You'd be naive to think if ZTE were to go under will be at America's best interest. U.S. semiconductor industry as a whole will be impacted as ZTE is one of the largest mobile handset and networking equipment manufacturer.

Re: ZTE of China to Pay $1B Fine in Deal to End U.S. Sanctions

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Post by [deleted] » Thu, Jun 07, 2018, 6:02 PM UTC

devy wrote: post #5

You'd be naive to think if ZTE were to go under will be at America's best interest. U.S. semiconductor industry as a whole will be impacted as ZTE is one of the largest mobile handset and networking equipment manufacturer.

[deleted]

Re: ZTE of China to Pay $1B Fine in Deal to End U.S. Sanctions

#7

Post by prklmn » Thu, Jun 07, 2018, 6:08 PM UTC

“Too many jobs in China lost” - Xi’s waterboy and president of the USA

Re: ZTE of China to Pay $1B Fine in Deal to End U.S. Sanctions

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Post by martythemaniak » Thu, Jun 07, 2018, 6:24 PM UTC

[flagged]

Re: ZTE of China to Pay $1B Fine in Deal to End U.S. Sanctions

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Post by silverbax88 » Thu, Jun 07, 2018, 6:29 PM UTC

devy wrote: post #5

You'd be naive to think if ZTE were to go under will be at America's best interest. U.S. semiconductor industry as a whole will be impacted as ZTE is one of the largest mobile handset and networking equipment manufacturer.

Right, because when a supplier for anything that has a massive market goes out of business, no one has ever come in to serve that market...

Re: ZTE of China to Pay $1B Fine in Deal to End U.S. Sanctions

#10

Post by tedsanders » Thu, Jun 07, 2018, 6:33 PM UTC

devy wrote: post #5

You'd be naive to think if ZTE were to go under will be at America's best interest. U.S. semiconductor industry as a whole will be impacted as ZTE is one of the largest mobile handset and networking equipment manufacturer.

Do you know of any analysis on the projected impacts?

On the one hand, ZTE buys a lot of semi components from the US, and if ZTE craters, those sales disappear.

But on the other hand, if ZTE craters, then other NEMs and handset makers would presumably replace those sales. The thousands of 5G base stations that AT&T and friends are building are still going to get built whether it's ZTE or someone else supplying the components. So if ZTE disappears, it's not like demand for the low-level components disappears too - in theory, those demanded supplies should just get rerouted through other intermediate suppliers, right?

So to first order, I'd think the the effects would be zero. To second order, maybe there would be changes in supplier mix, as Huawei's favorite supplier gains relative to ZTE's favorite supplier. And maybe the loss of ZTE does cause some near-future work to be delayed, shrinking the short-term market slightly. And maybe the loss of a player concentrates more market power in the ZTE-level of the supply chain, drawing profits from the carriers above and the component makers below. And of course there will be costs caused by rerouting supply chains and inventories and the uncertainties therein. But I have no clue how marginal or substantial those second-order costs might be.