HONG KONG—In the five years since ZTE Corp. ZTCOY -3.26% was branded a national-security threat by U.S. lawmakers, the Chinese telecommunications giant has quietly been building its own American success story.
While locked out of the market for networking technology, ZTE has grown its smartphone business, which is now the fourth largest among U.S. consumers. Last year alone the Shenzhen-based company almost doubled its market share to 11.2%, selling 19 million handsets and making the country its biggest market, according to research firm Canalys.
Now, ZTE executives are grappling with a new roadblock that they say threatens the company’s very survival. The U.S. government moved on Monday to block sales of American products to ZTE, saying the company violated the terms of a deal last year settling allegations of sanctions-busting involving North Korea and Iran.
The ban has forced the Chinese telecom titan to assess whether it must—or even can—replace key components such as semiconductors supplied by Qualcomm Inc. QCOM -4.82% and the Android mobile operating system it uses, made by Alphabet Inc.’s GOOGL 1.31% Google.
Stars and Bars
China's ZTE is the fourth-largest smartphone vendor in the U.S., underscoring its dependence on American consumers as sales have lagged globally.
Top smartphone vendors by shipments, 2017
GLOBAL: 1.46 BILLION
1
Samsung
21.8%
2
Apple
14.8%