Trump Lifts ZTE Ban: Implications for 5G

On May 13, Trump tweeted to lift the ban on ZET that suspended its major business after being stopped from using the components made in the US.

Donald Trump’s tweet

The sudden announcement caused a stir among mainstream financial media and online communities in the U.S. There were 16,500 replies to the tweet within three hours.

ZTE currently has nearly 80,000 employees, including 30,000 R&D personnel.

As of December 31, 2017, the Chinese tech company owns over 69,000 pieces of global patent assets and more than 30,000 authorized patent assets, including over 1,700 patents worldwide concerning 5G deployment.

No further comments from Trump or the U.S. Department of Commerce at this time, according to New York Times. ZTE’s U.S. spokesperson also has not yet responded to media requests for comments.

However, Douglas Jacobson, a D.C. litigation lawyer who represents ZTE suppliers in the U.S., was overjoyed, exclaiming, “This was totally beyond my expectations!”

Good turning point

In an op-ed titled “U.S. reconsideration on ZTE ban is welcomed”, the Global Times pointed out that regardless of the reasons for the ZTE sanctions, the recent tweet from President Trump is welcoming. Resuming supplies to ZTE is mutually beneficial for ZTE and its U.S. suppliers, and will also help maintain U.S. business reputation.

Analysts’ Interpretations: What’s Next?

The right of speech and of intellectual properties in the field of 5G may become the focus of negotiations, and its further impact needs to be evaluated.

Analysts have reached a consensus on market impact, emphasizing the future of 5G development and stocks behind proprietary technology patents.

Essence Securities, a securities company in China, stated, “We firmly believe in China’s 5G development.

China Mobile will launch the first batch of 5G chips before the end of 2018. It will release the first batch of 5G commercial terminals, including data terminals, smartphones and other products by the first half of 2019.

During the week of the ban on ZTE, the three major Chinese operators still advanced 5G on schedule: China Unicom conducted 5G trials in 16 cities. Telecom conducted 5G trials in 12 cities. China Mobile conducted 5G trials in five cities and 5G application demonstrations in 12 cities.

The internet team from Zhongtai, a market analysis institution, believes it is necessary to focus on the anticipated recovery of 5G and the stocks affected by the tensions between U.S. and China. However, they also stressed that this does not change the logic of business autonomy and domestic substitution in the long run.

Rivalry between China and the U.S. has lowered the market’s expectations for 5G development. However, we believe that it has not affected China’s determination to develop 5G. The incident has made us fully aware of the weaknesses in China’s chip industry. Lifting the ban cannot change the logic of business autonomy and domestic substitution in the middle and long run. It is more pragmatic to push forward relevant national strategies.