ZTE's US Pain Isn't Worth $1 Billion Analyst: ZTE Ban Could Spark Consolidation In Optical Space ZTE's US Pain Isn't Worth a $1 Billion Overreaction

ZTE's US Pain Isn't Worth $1 Billion

The drop in suppliers' market caps looks overdone.

MENU About The Company Bloomberg London Homepage Markets Stocks Currencies Fixed Income ETFs Commodities Rates + Bonds Economics Magazine Benchmark Watchlist Economic Calendar Tech U.S. A look at ZTE's filings, however, shows that its biggest supplier last year accounted for 3.17 billion yuan ($505 million) of purchases. At $105 million, Oclaro Inc. has the second-largest exposure to ZTE, according to filings from the San Jose-based maker of networking components.

Analyst: ZTE Ban Could Spark Consolidation In Optical Space

The U.S. government banned U.S.-based telecom companies from selling hardware and software components to the Chinese company ZTE for seven years. The ...

That's 18 percent of last year's revenue, a huge jump from 10 percent, or $42 million, the year before. Finisar Corp.'s 4.1 percent drop wiped off $75.6 million. Terms of Service Trademarks Privacy Policy ©2018 Bloomberg L.P. News of a ban on sales of U.S. products to ZTE Corp. sent shares of some suppliers through the floor. Maynard, Massachusetts-based Acacia has the largest exposure to ZTE, but that slide looks overdone.

ZTE's US Pain Isn't Worth a $1 Billion Overreaction

Mostly, that was an overreaction. As ZTE's customers switch to rivals such as Cisco Systems Inc., Huawei Technologies Co. or Coriant Operations Inc., it's likely Acacia will be able to shift some of its orders across, too. But there's no reason this ZTE development should put that merger in jeopardy. While losing a major customer is always going to be a financial headache for those four smaller players, the fallout isn't worth a collective $1.02 billion drop in market value.

ZTE isn't among clients accounting for 10 percent of the U.S. chip company's revenue (interestingly, Oppo/Vivo did fall in that category), according to Qualcomm's annual report. The task for CEO Raj Shanmugaraj will be to provide the technical support those clients need to test and verify his offerings in order to minimize disruption. At the same time, the Chinese company isn't a major customer for Lumentum.