ZTE Stock Surges After US Lifts Ban
Stocks of Chinese telecoms giant ZTE climbed 17% after it was confirmed that the US supplier ban imposed on it had been lifted. However, analysts warned that the company’s business in the country is still largely uncertain due to a number of major challenges.
Nikhil Batra, senior research manager at consultancy IDC, says that the company will have to rethink its overall design strategy as it will have to find substitutes for suppliers such as Avnet, Qualcomm, Broadcom etc to reduce its reliance.
Aside from the $1 billion penalty ZTE had to pay the US Treasury, Batra says the company will also have to win back customer confidence. Jefferies analyst Edison Lee also estimated that ZTE will have to recovers from an operating loss of up to 4 billion yuan for April-June due to its suspension.