ZTE Projects Surprising Q3 Profit After Crippling US Ban

Chinese technology giant ZTE is expecting a surprise quarter-three profit after spending close to a third of this year being crippled by a U.S. Commerce Department-issued denial order, the company said as part of its latest interim report. ZTE is projecting a profit ranging between the equivalent of approximately $3.5 million and $146.5 million over the current three-month period. The development comes a day after ZTE confirmed its production operations have returned to normal, having been halted this spring following Washington’s sanction. ZTE still expects to lose up to $1.14 billion over the first nine months of the year, with its modest quarter-three profit not being a sign of a quick recovery.

Many industry watchers remain highly skeptical about the company’s prospects, particularly in the United States where the firm seemingly expended all of its political capital just to stay afloat. The firm paid close to $900 million over trade sanction violations last year, only to agree to another $1 billion fine after breaking the original settlement several months back. It made another $400 million eschew payment as part of the same agreement and is now also financing an independent auditor team tasked with monitoring any potential embargo violations moving forward. ZTE also conceded to replacing the entirety of its management and directors, with the Commerce Department waiving the seven-year denial order in exchange.

Under the terms of the original sanction, ZTE was prevented from purchasing American technologies, which crippled the majority of its consumer electronics and telecom operations and would have likely led it to bankruptcy by next year. The latest iteration of the annual defense bill also contains a provision that forbids any federal orders for ZTE-made tech, effectively killing any telecom ambitions the company had in the U.S. ZTE previously argued its settlement violation that led to the seven-year denial order was a result of an accidental omission and wasn’t an intentional act of defiance, claiming Washington’s response to the matter was overly harsh and hence unfair.

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