Millions of American users of smartphones made by ZTE are already feeling the fallout from the U.S. Commerce Department’s blacklisting of the Chinese phonemaker.
Millions of American users of smartphones made by ZTE Corp. are already feeling the fallout from the U.S. Commerce Department’s blacklisting of the Chinese phonemaker: They’re unable to update Google’s Android operating system.
Last month’s wide-ranging order by the U.S. Commerce Department prevents American companies from selling components and software to ZTE, the fourth-largest vendor of mobile phones in the U.S. That has led Google to halt updates to ZTE phones, leaving users cut off from security patches, technical support and other functions provided by the Android operating system used on ZTE’s smartphones.
The lapse could leave some consumers with inoperable devices, according to a person familiar with the matter. The Shenzhen-based company has sold nearly 25 million smartphones in the U.S. since the start of last year, according to Canalys, a research firm. Some of those customers have taken to social media to vent frustration over the inability and lament that they may have to dump their ZTE models and switch to other brands.
For ZTE and its customers, a tweet Sunday from President Donald Trump stating that he is working with China’s president to keep ZTE in business offered a ray of hope, though it’s unclear if or how soon ZTE will get a reprieve. Trump’s intervention underscored how ZTE has become a political bargaining chip in ongoing U.S.-China trade discussions, and is likely to figure in talks set for this week in Washington between the two sides.
The sales ban has been crippling to ZTE, which has halted assembly lines and shut down major business operations, unable to get crucial parts like semiconductors for its mobile phones. ZTE has asked for a stay of the Commerce Department order, which the department has said it is reviewing.
Further clouding matters, ZTE and its suppliers have received little communication or guidance from the Commerce Department about how to properly adhere to the order since it was handed down in mid-April, according to a person familiar with the matter.
A Commerce Department spokesman didn’t immediately respond to a request for comment.
The sales ban stems from the Commerce Department’s finding that ZTE violated a 2017 settlement agreement resolving the company’s evasion of U.S. sanctions on Iran. The department said ZTE failed to sanction key employees in time, and said the company made false statements to the government. ZTE has told U.S. authorities that process failures led to its failure to fully comply with the settlement, according to a person familiar with the matter.
Under its compliance with the Commerce Department order, Google has ceased providing technical support to ZTE, and has stopped providing ZTE with updates and security patches to its Android software, according to a person familiar with the matter.
That has affected the availability of these updates to ZTE phone users, this person said. The availability of Google and third-party apps on the Google Play app store haven’t been affected by the ban, this person said.
Limited access to Android security fixes means “the safety of the users’ personal data could be vulnerable, and they can’t experience the latest features introduced to Android,” said Mo Jia, an analyst at Canalys. “It’s critical for ZTE to reach a settlement with the U.S. government on both hardware side and software side to continue its smartphone business.”
Though Chinese consumers have shunned ZTE in favor of other domestic brands, the company has found its biggest success in the U.S., where it captures a big share of the budget and midtier phone markets. The company in the U.S. trails only Apple Inc., Samsung Electronics Co. and LG Electronics. Popular ZTE devices include the flagship Axon M, a dual-screen phone unveiled last year, and its Blade line of smartphones.
Kyle D. Tackett, a 28-year-old worker at Walmart in Shelbyville, Ind., purchased his ZTE Axon 7 phone from a Fry’s Electronics store 18 months ago, because it was cheaper than top-end phones and he was impressed by its “amazing” speaker quality.
Unable to update his operating system to Android 8.0 last month as other brand phone users could, he said he’s frustrated since that his phone is getting more buggy. When he tries to update, the phone searches for a minute before indicating a “no network connection,” he said.
“I understand ZTE may have made a mistake but I believe the punishment is too severe,” Mr. Tackett said in a series of message exchanges with the Journal. He said he was disappointed his phone’s functionality had been affected by what he called global politics. When it comes time to buy a new phone, he said he would unlikely purchase another ZTE until they are “able to settle their situation.”
Android is the world’s most popular operating system for mobile phones, running on some 60% of devices sold in the U.S. last year and 83% of devices world-wide, according to Canalys.