ZTE of China to Pay $1B Fine in Deal to End U.S. Sanctions (opens in new tab)

Right, because when a supplier for anything that has a massive market goes out of business, no one has ever come in to serve that market...

Do you know of any analysis on the projected impacts?

On the one hand, ZTE buys a lot of semi components from the US, and if ZTE craters, those sales disappear.

But on the other hand, if ZTE craters, then other NEMs and handset makers would presumably replace those sales. The thousands of 5G base stations that AT&T and friends are building are still going to get built whether it's ZTE or someone else supplying the components. So if ZTE disappears, it's not like demand for the low-level components disappears too - in theory, those demanded supplies should just get rerouted through other intermediate suppliers, right?

So to first order, I'd think the the effects would be zero. To second order, maybe there would be changes in supplier mix, as Huawei's favorite supplier gains relative to ZTE's favorite supplier. And maybe the loss of ZTE does cause some near-future work to be delayed, shrinking the short-term market slightly. And maybe the loss of a player concentrates more market power in the ZTE-level of the supply chain, drawing profits from the carriers above and the component makers below. And of course there will be costs caused by rerouting supply chains and inventories and the uncertainties therein. But I have no clue how marginal or substantial those second-order costs might be.

The only reason the US is concerned with saving ZTE from going under in this instance, is as a favor-trade with China (they sign off on Qualcomm-NXP, the US gets to conclude eating an important EU company). It acts as an overall goodwill exchange in the midst of the trade deal positioning.

Exactly this. It's insane that the US is threatening EU companies for (currently, legally) doing business in Iran, while at the same time letting ZTE get away with, well, having done the same thing (except illegally, when the sanctions were still in place). And all of that to save "many jobs"... in China.

China knows how to play the game. They know that their investment won't stay under wraps... so I don't see how this would benefit Trump. Could the trump organization have rejected China's investment into the Indonesian state project if they wanted to stay clean? Or would that require dropping out of the entire project completely, and what would the contract violation terms have entailed if they were as major a part of that project as it seems? Would the contract violation agreement result in greater than 500M losses? There are very interesting political games afoot.

Im not too sure what your arguing. He is doing ALL things that are good for the Republicans. Maybe your just upset he has been successful? Trump has the MOST conservative cabinet in more than a quarter-century. Do your homework and stop ranting...

I suppose one man's successful negotiation is another man's reason to launch into a digressive rant.

1.4 Billion in penalties. I don't see any other President of the USA doing that. Its a WIN for us.

> In the past we've seen other countries deal with Iran while under sanctions, and we've gotten nothing out of them other than speeches at the U.N.

> I kinda think I like this better.

I think this is immensely unfair - you cite one deal that got a lot of press due to a series of unexpected about-faces in the US position. There’s no reason to believe that agreements of this nature are made but not publicized.

Also, I'm not sure I understand how this action relates to the sanctions placed on Iran. What is your reasoning?

Just wait until the next time when China holds the keys to decide on an important matter. It'll be interesting to see how this eventually plays out, but maybe you won't like it better then.