ZTE delayed the release of its latest earnings results as it needs time to determine the impact of an order barring US companies from selling components to the Chinese vendor, a move which could also undermine its Android device activities.

The Shenzhen-headquartered company was scheduled to release its Q1 financial results today (19 April) and said in a statement the release is “pending an assessment on the impacts of the activation of denial order” by the US Department of Commerce, which said the company made false statements during settlement talks and a probationary period in 2017. The ban will prevent ZTE from getting its hands on key hardware components from US companies such as Qualcomm and Intel for its smartphones and network equipment.

ZTE’s postponement comes after components makers, mobile operators, retailers and Google asked for clarity on how they will be affected by the order, Reuters reported.

The news agency quoted Tim O’Toole, a sanctions specialist whose clients include companies which have done business with ZTE, as saying: “There are a lot of companies around the world scrambling to find out what this means. It’s rare that you go from a-ok to no transactions overnight.”

Google and ZTE have reportedly been discussing the issue to assess the impact.

Significant share
US companies supply an estimated 25 per cent to 30 per cent of components in ZTE products, Reuters said. ZTE held around a 12 per cent share in the US smartphone market in Q3 2017.

Trading in its shares have been suspended since 17 April when the company requested a halt in transactions on the Stock Exchange of Hong Kong “pending the release of an inside information announcement in respect of the activation of denial order by the Bureau of Industry and Security of the US Department of Commerce”.

The US Department of Commerce stated the Chinese equipment vendor made false statements related to senior employee disciplinary action it said it would take following an earlier investigation into the sale of telecoms equipment to Iran and North Korea.

In March 2017, the company pleaded guilty to charges it illegally shipped US goods to Iran in violation of trade sanctions. As part of the deal, the US put on hold a seven-year ban on the company’s export privileges, but reserved the right to activate it in response to violations incurred during a three-year probation term.

US commerce secretary Wilbur Ross said in a statement that ZTE voided the settlement agreement by making false statements during both the negotiation process and following trial period about what employee disciplinary measures it implemented.