ZTE’s Output Is Back to Normal, Plans More Chip R&D, New Chairman Says

ZTE’s Output Is Back to Normal, Plans More Chip R&D, New Chairman Says

Liao Shumin

Date: Wed, 08/29/2018 - 14:56 / source:Yicai
ZTE’s Output Is Back to Normal, Plans More Chip R&D, New Chairman Says
ZTE’s Output Is Back to Normal, Plans More Chip R&D, New Chairman Says

(Yicai Global) Aug. 29 -- ZTE is putting this year’s troubles behind it as China’s second-biggest telecom equipment maker returns to normal production and will focus more attention on researching and developing key components such as microchips, according to the company’s new chairman.

“The company’s primary business has fully recovered and production tasks in August have returned to normal,” Securities Times reported Li Zixue as saying at an extraordinary general meeting of the Shenzhen-based company yesterday. “Research and development is still recovering at a rapid rate and fifth-generation network testing is on schedule.”

ZTE is getting back on its feet after a crippling US denial of export order. The US government blocked domestic firms from selling chips to the Chinese firm on April 16, after ZTE sent products that contained US technologies to Iran, a country the States has sanctioned. In order to settle the dispute in June, ZTE paid a USD1 billion fine and put USD400 million into an escrow account and agreed to replace its board of directors and senior management. The new board was unveiled on June 29.

“It is certain that ZTE is still in the first camp in the communications industry,” an upbeat Li said. “The company’s orders are good, basically equal to those in July and August last year.”

ZTE’s stock [SHE:000063] rose more than 2.6 percent to close at CNY19.45 (USD2.85) today. That’s half what the shares were worth when they reached a 12-month high of CNY40.15 last November, but a more than 60 percent gain from a low of CNY12.10 on July 11. The benchmark Shenzhen Component Index lost 0.6 percent today.

Since the export ban was lifted, ZTE has made major changes to its business, mainly by cutting back on outsourcing. At yesterday’s shareholder gathering, Xu also outlined the company’s plans for strategic change. “ZTE will make greater efforts in two areas: one is research and development of key components such as chips inside the company and the other is cooperation with third-party chipmakers,” he said.

ZTE Microelectronics, the firm’s semiconductor unit, will focus on assisting its parent in research and development of chips for primary devices, such as baseband chips, 5G transmission and exchange chips, as well as IP chips, which are key to the company’s core competence, Xu added.

Editor: Emmi Laine 

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Keywords: MSCI, semiconductor, Sanctions, US-CHINA RELATIONS