Why does the United States seek trouble for ZTE? What's behind the calculations?

In recent days, trade disputes between countries have become increasingly fierce. However, most of these frictions have been directed against a certain industry. However, they were recruited on April 16. This is the famous ZTE Corporation. Many of the companies that have been named and precisely targeted in the friction have asked why ZTE is ZTE. Why does the United States find ZTE's troubles?

I. A company's war against a country

On the evening of April 16, Reuters reported that because of violations of the US government’s sanctions ban, the US Department of Commerce has banned China’s ZTE Corporation from buying component products (including Qualcomm chips, etc.) from the US market for a period of up to 7 years. In addition, the U.S. Department of Commerce’s Bureau of Industry and Security also imposed a fine of 300 million U.S. dollars on ZTE. This part of the fine can be suspended, mainly depending on the implementation of the agreement in the next seven years.

The U.S. Department of Commerce stated that the ban was because ZTE violated the U.S. export ban imposed on Iran. As early as March of last year, the US Department of Commerce had imposed export restrictions on ZTE. The reason was that ZTE had violated the U.S. export ban on Iran. ZTE then reached an agreement with the U.S. government and paid a fine of 890 million U.S. dollars. Eventually, the U.S. Department of Commerce lifted the export ban on ZTE. However, as part of the agreement, ZTE promised to dismiss the four senior employees and penalize the other 35 employees. According to Reuters, ZTE dismissed only four senior employees and did not penalize the other 35 employees. This may be the fuse of this incident.

However, this time ZTE was not so good. On the morning of April 17, ZTE issued a statement to all employees, saying that the crisis response working group had been established for the first time and analyzed and formulated countermeasures. However, no matter what ZTE's response measures are, it is actually a bit difficult for a company to face a world-class power. Therefore, the enterprise crisis of ZTE has risen to some extent as a diplomatic crisis.

In response to this crisis, on April 17, 2018, the Ministry of Commerce issued the No. 38 Announcement of 2018, which promulgated a preliminary ruling on anti-dumping investigations of imported sorghum originating in the United States. The Ministry of Commerce ruled that there was dumping of imported sorghum originating in the United States. The domestic sorghum industry was substantially damaged, and there was a causal relationship between dumping and substantial damage, and it decided to implement temporary anti-dumping measures against imported sorghum originating in the United States. According to the ruling, since April 18, 2018, when importing import sorghums originating in the United States, importers should provide the corresponding guarantee deposits to the Customs of the People's Republic of China in accordance with the company's deposit rate determined by the ruling (178.6%).

Although from the point of view of this ruling, it is indeed a matter of repayment, but it still does not solve the problem for ZTE. It seems that ZTE’s hardship has already been jeopardized. Then the United States has to pick Zhongxing to start. The United States is eyeing it?

Second, why does the United States specialize in picking up Zhongxing?

Actually, the Americans can look for Zhongxing to start with a wonderful move. First of all, in China’s various industries, the communications industry seems to have always been an advantageous industry in China. We only use mobile communication products that we are most familiar with as examples. It has always been said that from the iPhone, to a series of domestic mobile phones represented by Huawei and Xiaomi, all of them are made on the surface of China, and the signs of madeinChina will be printed behind them. However, we should not be too happy to be too early to assemble manual work. A few products such as mobile phone shells are actually made in China. The internal components of most mobile phones are actually produced in foreign countries.

According to statistics of the General Administration of Customs, since 2013, China’s various integrated circuits related to the telecommunications industry and the IT industry have become China’s largest imported products, and the total amount of imports that year has reached US$2322 billion, or even exceeded. The amount of oil imported in the year was 219.65 billion U.S. dollars, which became China’s need to import the largest amount of goods from abroad. Take the mobile phone industry as an example to purchase the memory chips that smart phones need to use. China has to pay more than US$68 billion a year for this purpose, and large-scale integration is required for servers, cloud computing devices, IoT devices, and artificial intelligence devices. The purchase cost of the circuit is even more.

At the same time, the manufacturing of China's memory chips is almost blank. The three giants Samsung, Hynix, and Micron in the field of mobile phone storage chips monopolize market share of nearly 94%, which means that we use 1G and 2G in our mobile phones. These so-called 4G memories all basically need to be imported.

Of course, the memory chip is only the tip of the iceberg. The core of the memory chip is actually the heart CPU of the mobile phone. The CPUs of mobile intelligent terminals in the world are basically monopolized by Qualcomm of the United States and MediaTek of Taiwan. Of course, there are also Huawei's Hassell Kirin chips in the mainland. And Xiaomi’s silicon chips, etc. Almost all of the high-end mobile phone chips are manufactured by Qualcomm of the United States. Even if we step back and say we don’t use Qualcomm’s CPU, the baseband chips and RF chips of the mobile phones come from Qualcomm and other US suppliers, the end result is that if you do not use the United States components, then for mobile phone manufacturers can be described as extinction. In the field of communications equipment manufacturing, this kind of jamming phenomenon is even more serious.

Therefore, if the United States wants to deal with China, then it will undoubtedly be a good idea to deal with China's telecommunications hardware makers, and it can be a deadly tactic. Why is it that ZTE is not Huawei? It is known that both ZTE and Huawei are giants in the Chinese communications industry. Huawei's market share and business development exceed ZTE. This is the wishful thinking of the United States. If you start directly against Huawei, then the stimulus to China is undoubtedly obvious. Find a second-year ZTE to start, and on the one hand, persimmons are soft. Pinching, on the other hand, is not without any retreat, giving room for their own roundabout, so how to look at how appropriate ZTE, ZTE so lying on the gun.

3. What is the impact of ZTE’s system in the end?

As a matter of fact, we have come to see that for ZTE itself, this sanction has been an innocent disaster. It is even a disaster in a certain sense. The U.S. ban is basically stuck on the neck of ZTE. On the one hand, ZTE’s main Basically, business communications are almost to be indiscriminately attacked. On the other hand, even if it is a mobile phone business, ZTE’s high-end machines may be completely destroyed. ZTE’s smart phone market in China has already worked hard in the second tier. In the case of such a blow, in the highly competitive mobile phone field, high-end mobile phones without Qualcomm chips are basically the rhythm of self-destructive martial arts. It can be said that ZTE is now in jeopardy.

While we cheer for ZTE, we must also fully recognize that China is currently the biggest short board. Although we have specialized manufacturing capacity for large aircrafts and high-speed rails, China’s short board in high-tech fields is still very obvious. Especially when the Internet and mobile Internet communications have become the necessities of life for most Chinese people, when the mobile phone becomes the digital organ of the Chinese people, we must be careful, that is, our opponents will choose the one we most Weak areas are holding our throats. Today, as trade protectionism in the world has gradually risen, we must face up to the facts.

Even when we are accustomed to using smartphones and smart terminals for convenience, they may at any time become the enemy's weapon against us. This weapon has given us little recourse. It is expected that ZTE will be the first to be named. If China’s manufacturing giants crack down on key breakthroughs, then he is probably not the last one. As long as we do not have sufficient manufacturing capacity, we do not have the ability to manufacture core components in China with independent intellectual property rights. This means these highly sophisticated zeroes. At any time, parts will become the sword of Damocles hanging over our heads from our products and raw materials.

Previously, we always said that it was better to buy than to buy, not to buy, this idea may be useful decades ago, but today we must have the ability to defend our own manufacturing industry. Without this ability, dangers may come at any time. This matter requires us to think hard and focus on it.

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