INTC Intel Corporation

By Dan Strumpf 

President Donald Trump said he was working with Chinese President Xi Jinping to keep ZTE Corp. in business, throwing an extraordinary lifeline to the stricken Chinese telecommunication giant.

Mr. Trump said in a Sunday tweet that the Commerce Department -- which is reviewing ZTE's request for a stay of an order banning American companies from selling to the Shenzhen-based firm -- has been instructed to "get it done." Mr. Trump added: "Too many jobs in China lost."

The surprise intervention comes less than a month after ZTE was hit the ban. The Commerce Department ordered U.S. companies to stop exporting to ZTE in mid-April, saying the Chinese company violated the terms of a 2017 settlement resolving actions for its evasion of U.S. sanctions for earlier selling to Iran.

ZTE, which relies on billions of dollars in component imports from U.S. tech titans such as Qualcomm Inc. and Intel Corp. has warned the ban threatened its survival. Last week, the company said it had ceased major business operations.

The Wall Street Journal reported Saturday that in its efforts to have the ban stayed, ZTE has told U.S. authorities that process and human-resource errors, not a plan of systematic deception, were responsible for the lapses in fully complying with its 2017 settlement, according to a person familiar with the matter. The company also believes that the ban is a disproportionate penalty, this person said. The Commerce Department has said it was reviewing the stay request.

ZTE and the Commerce Department couldn't immediately be reached for comment following the president's tweet.

The sudden sales ban placed the company at the sharp end of a rising trade dispute between Washington and Beijing that has included tit-for-tat tariffs. Technology has become a focus of tensions, with the U.S. accusing China of transferring key technologies back home and unfairly supporting domestic champions.

For years, the U.S. has accused equipment made by ZTE and its larger crosstown rival Huawei Technologies Co. of being a national security threat, an accusation that both companies have denied.

Chinese representatives complained to their U.S. counterparts about the ban during a recent visit by a U.S. trade delegation to Beijing. The export ban was expected to figure in another round of trade talks between the two sides in Washington this week.

ZTE employs roughly 75,000 people and is the fourth-largest mobile phone vendor in the U.S., selling 19 million phones in America last year, making it the firm's biggest market.

Backed by the Chinese government as a tech national champion, ZTE works alongside Huawei in the race to develop next-generation 5G wireless technology -- an area in which Qualcomm is viewed by Washington as a crucial U.S. competitor. ZTE sent 11 representatives to a recent industry-sponsored meeting in India to discuss 5G specifications, according to conference records.

In 2017, Huawei led the global telecom-equipment market with a 27% share, followed by Nokia at 17% and Ericsson at 13%, according to research firm Dell'Oro Group. ZTE was fourth with 10%. But in the U.S., Ericsson and Nokia each held a 48% market share.

Write to Dan Strumpf at daniel.strumpf@wsj.com

(END) Dow Jones Newswires

May 13, 2018 13:45 ET (17:45 GMT)

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