It is reported that the US Department of Justice is investigating whether Huawei has violated the relevant sanctions imposed on Iran, which may impose restrictions on Huawei, or it will bring unprecedented blows to the global telecommunications industry.
The first concern is that Huawei may suffer the punishment of its competitor ZTE. Last week, after being accused of failing to rectify the related business, ZTE was banned from purchasing US-made components for a period of seven years. Where is it sin? The answer is a violation of sanctions against Iran.
The knock-on effect of this decision has been revealed. According to relevant data, 80% to 90% of ZTE's products in 2016 use parts supplied by US suppliers. When the ban comes out, ZTE’s supply chain will be in danger, and ZTE said its survival will be threatened. Shares of component suppliers including 30% of revenue from ZTE's Acacia also began to plummet.
ZTE's customers are also nervously tracking developments. Sigve Brekke, CEO of Norwegian telecommunications giant Telenor ASA, was asked about ZTE’s incident: “We use ZTE equipment in operations in Malaysia, Pakistan and Hungary, so we are paying close attention to this situation. Since the first batch In the one and a half years after the order, we have been paying attention to the dynamics of ZTE."
KrisTIan Pullola, the chief financial officer of ZTE's main competitor, said when he was asked whether he would benefit from the ZTE incident: "Our products are of high quality and we believe that we have a great chance of success in this environment. We will keep a close eye on developments while fully capturing the opportunities that may arise in the radio, routing or optics sectors."
In the recent earnings conference call, Ericsson CEO Borje Ekholm was very cautious. He said: "Many customers have questions, this is not surprising, but we should not summarize these issues for the time being."
If the measures taken by the United States against ZTE have caused such great turmoil, then Huawei’s actions may be more destructive. ZTE, which had a total revenue of $17.2 billion last year, still maintains a certain distance from Huawei, Ericsson and Nokia, and is still marginalized in some countries. Huawei is the largest of these industry giants. Last year, sales reached $95.5 billion, and carrier network sales were about $47 billion.
For some US component manufacturers, prohibiting the sale of equipment to Huawei may be devastating. According to Michael Genovese, an analyst at MKM Partners, optical network device maker NeoPhotonics appears to be the most affected because 40% of its sales revenue comes from Huawei. However, Oclaro, Finisar and Lumentum Holdings Inc. also rely heavily on Huawei's cooperation. One-tenth to one-fifth of the revenue comes from Huawei.
In addition, the ban may bring more opportunities to Nokia, etc., not just to ZTE.
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