ZTE can no longer use Qualcomm chips in smartphones, threatening the Axon 9’s existence

ZTE can no longer use Qualcomm chips in smartphones, threatening the Axon 9’s existence

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A few years ago, ZTE was accused of dodging United States sanctions placed on Iran by selling U.S. technology through ZTE phones in the country. Faced with nearly a billion dollars in fines, the company paid and agreed to fire 4 senior employees and discipline 35 others. Despite agreeing to do so, the Shenzhen based company undertook no further action than firing 4 senior employees, it admitted in March of this year. This means that under the terms of the agreement, U.S. companies cannot export prohibited goods such as chipsets to ZTE for seven years, effectively crippling the company globally (and potentially the ZTEAxon 9) as it can no longer purchase Qualcomm chips for use in its phones. ZTE isn’t the only company hurt by this either as Acacia Communications, which made 30% of its revenue from ZTE in 2017, will also be hit hard.

For those unfamiliar with ZTE, they brought us the Axon 7 back in 2016 which became a direct competitor to the OnePlus 3. With its arguably better specs at a low price, both devices traded blows, with the OnePlus 3’s open development community being the ultimate decider as to which device was the best of the two. This isn’t the first action we’ve seen undertaken against ZTE by the U.S. government, who banned the use of their devices (and Huawei devices) by government contractors earlier this year. This will not only truly bar the company from the U.S. once and for all, but it’s unknown if they will even be able to survive.

With the Axon 9 already in the making, it’s unknown what will happen to the device now, as it was unlikely to be using a MediaTek processor given that it aimed to be a flagship device. MediaTek is no longer focused on the flagship market, meaning that ZTE can either continue by making mid-range devices or they will have to purchase processors from a third-party like Huawei, Samsung, or even Xiaomi.

Either way, it’s unknown what the next course of action will be for the company or what it will intend to do with the Axon 9. It’s possible that given it has likely already been designed and ready for production, it will be completely scrapped with a new device being announced in its place. That’s not even getting into what happens to currently available ZTE devices which use American produced components, nor the legal ramifications regarding software produced by the company. ZTE is not only barred from importing hardware but also software as well. This may rule out the possibility of including Google Play services on their devices, and even possibly providing software updates to their older devices. It’s crazy to think about, but only time will tell if this is the death of ZTE.

Source: Reuters