Despite already having paid a $US900 million fine for violating US sanctions, on Tuesday, the US Department of Commerce slapped a ban on ZTE preventing all American companies from selling parts or components to the Chinese networking and smartphone maker.
That right there is a serious obstacle for ZTE, which has used Qualcomm chips or Intel modems in a number of its major phones, such as the ambitious ZTE Axon M that debuted last fall. But if that didn't make things hard enough on ZTE, a new report from Reuters says that the DoC's recent ban means that ZTE might lose access to Android as well.
Not only is Android by far the world's most popular mobile OS, it's also the operating system ZTE has installed on essentially every single one of its phones in the last five years. What's even worse is that aside from Android, there aren't really any other alternatives. Apple has never licensed iOS out to third parties, so that's not an option, which really only leaves awkward solutions like Samsung's Tizen OS, Windows Mobile (lol), or a handful of Linux-based solutions like Sailfish OS.
According to Reuters, "ZTE and [Google's parent company] Alphabet Inc. have been discussing the impact of the ban, the source added, but the two companies were still unclear about the use of Android by ZTE as of Tuesday morning."
What makes things tricky is that licensing Android for use in a mobile device is typically free, provided that the device maker adheres to a strict set of conditions put forth by Google. However, even though no money is changing hands, depending on how US officials look at it, they could say Google is still selling components to ZTE because the company is able to use Android in exchange for doings things like pre-installing the Play Store and Google search widgets on its phones.
And if that wasn't enough, yesterday, US telecom regulators proposed new rules that would ban subsidies going to any government agency that purchased products from a company deemed a "security risk," claims that recently have been levied against both ZTE and Huawei.
If ZTE is banned form using Android, there's a chance the company may pull out of the US, and like Huawei, forced to refocus its efforts on other regions such as Europe and Asia.