Yesterday was a rough one for ZTE. A year after pleading guilty to violating sanctions with Iran and North Korea, the U.S. Department of Commerce brought the hammer down and announced a seven-year export restriction on goods sporting U.S. components.
That applies to more than a quarter of the components used in the company’s telecom equipment and mobile devices, according to estimates, including some big names like Qualcomm. The list may well also include Google licenses, a core part of the company’s Android handsets. According to a Bloomberg unnamed source, ZTE is evaluating its mobile operating system options as its lawyers meet with Google officials.
Many of the internal components can be replaced by non-U.S. companies. ZTE can likely lean more heavily on fellow Chinese manufacturers to provide more of the product’s internals, but it’s hard to see precisely where it goes from here with regard to an operating system. There’s an extremely small smattering of alternatives open to the company, but none are great. Each would essentially involve the company working to build things, including app selections, from the ground up — and likely play a much more central role in the OS’s development.
As for Google’s role in all of this, ZTE certainly isn’t make or break for Android’s fortunes. Still, it’s a pretty sizable presence. As of late last year, it commanded 12.2 percent of U.S. market share, putting it in fourth place behind Apple, Samsung and LG. It’s certainly in Google’s best interest to maintain as many prominent hardware partners as possible — though, not if it comes with the added risk of upsetting the DOC in the process.
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