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ZTE gets a lifeline at the Taiwanese chip supplier



HONGKONG-Taiwan regulatory agencies authorized a major provider of smart phone chips to sell

ZTE
Corp.


ZTCOY -15.37%

boosted the Chinese telecommunications company after its US suppliers were excluded from selling parts.

The Taiwanese supplier

MediaTek
Inc.,


2454 -2.15%

received permission to resume exports of chips to ZTE, a MediaTek spokesman said Monday. The company delivers chipsets that are used in a number of ZTE smartphones, and while this is not a panacea, analysts say resuming sales to ZTE will restore an important part of the ZTE supply chain.

U.S. Companies were prevented by the US Department of Commerce from exporting components to ZTE in Shenzhen last month, a move ZTE said was cut off from important parts and threatened its survival.

While Taiwanese companies like MediaTek are not directly affected By the ban, Taiwanese regulators had to apply for licenses to ZTE companies to do business with ZTE in order to continue exporting to ZTE. MediaTek spokesman said the Taiwanese authorities had given their approval on Friday.

An official from the Taiwanese Ministry of Economy issuing export permits confirmed that MediaTek was granted an export permit. The official said that several other Taiwanese companies are still awaiting export approval, but refused to name them. A ZTE spokeswoman did not respond to a request for comment.

MediaTek supplies chipsets for a range of ZTE smartphones that are sold worldwide. While ZTE may rely on MediaTek to replace chipsets from others, it's unlikely that all of its issues will be resolved, said Edison Lee, a telecommunications analyst at Jefferies. For example, in San Diego

Qualcomm
Inc.

"It's a good thing to deliver MediaTek chipsets to ZTE, but it's not good enough," Lee said. In addition, Qualcomm will supply ZTE with 5G chipsets, which ZTE needs for its phones to run on next-generation wireless networks.

ZTE relies on a number of US companies for a number of key parts including parts for its smartphones and components in the equipment it sells to telecom operators. ZTE is the fourth largest smartphone provider in the US and uses the Android OS

alphabet
Inc.

Google – for its phones

ZTE has been battling US export ban since last month's announcement. On Sunday it was said that it had formally applied to the US Department of Commerce for exile. Last week, Chinese officials expressed concerns about the ban on a US trade delegation in China.

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


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