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On July 20, Republicans in the US Senate decided not to reimpose any sanctions against Chinese telecommunications giant ZTE. Instead, Republicans at the request of President Trump are in favor of his decision to allow the company to do business in the United States with some restrictions.
Notably, in April, the US Department of Commerce imposed the order the company had violated the terms of a regulation of 2017 prohibiting the sale of US technology to Iran and to North Korea.
However, in May, President Trump asked the US Department of Commerce to reconsider its decision banning all manufacturers produced at ZTE. Meanwhile, ZTE paid $ 1 billion fine and deposited another $ 400 million escrow and pledged not to transfer US technologies to others. country.
concerned about China's desire to dislodge the United States as a leading developer and supplier of products in the high-tech sectors. Notably, the Chinese government sponsors most of these major manufacturers. These companies have become a serious threat to the economic and military supremacy of the United States.
President Trump has given sufficient indication that his administration would be particularly interested in the operation of the telecommunications industry. Safeguarding the high value patents of US heavy technology companies by Chinese companies is of paramount importance to the US administration.
ZTE Targeted Early
The US government banned developers of native mobile chipset manufacturers of fiber optic components from selling products to ZTE. President Trump issued a decree forbidding some Chinese telecommunications giants, including ZTE and Huawei Technologies, to sell products in the United States.
The Trump administration had banned US companies from selling their products to the Chinese. using these high tech products. This move is proof of the aggressive position the US government is taking to protect the next-generation innovative products of the US tech giants. (Read more: Trump to relax sanctions imposed on ZTE: who will win?)
Who wins if the ZTE ban is revoked?
If the US government ultimately withdraws the sanctions imposed on ZTE then the principal beneficiary will be the mobile chipset developer Qualcomm Inc. ( QCOM – Free Report). The company generates nearly 28% of its revenue from, among others, ZTE and Huawei. Notably, the world's largest chipset developer Intel Corp. ( INTC – Free Report) will also benefit from the situation.
Secondly, developers of fiber optic components will also benefit from the removal of ZTE sales restrictions. Leading developers of fiber optic components such as Acacia Communications Inc. ( CFIA – Free Report), Oclaro Inc. ( OCLR – Free Report), Finisar Corp. . ( FNSR – Free Report) and Lumentum Holdings Inc. ( LITE – Free Report) will be the winners.
Finisar has a rank Zacks # 4 (Sell). Qualcomm, Acacia, Oclaro and Lumentum have a Zacks # 3 (Hold) standings. Intel is wearing a Zacks Rank # 1 (Strong Buy) .You can see the full list of stocks today Zacks # 1 Rank.
The graph below shows the price performance of the six shares mentioned above in
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