Amid an escalating crisis within Chinese telecom firm ZTE, Chinese leader Xi Jinping spoke at a conference for Chinese state scientists and engineers about the country’s need to become technologically self-reliant.
“Only when we have fully grasped key technologies, can we fundamentally protect the country’s economic and national security,” Xi said on May 28, according to a transcript published by state-run media Xinhua.
Operations have screeched to a halt at China’s second largest telecoms company, after the United States imposed a ban that prohibited U.S. companies from selling tech parts or software to ZTE. The penalty was issued in April after ZTE was found to have defied terms of an agreement it signed in 2017 for violating U.S. sanctions against Iran and North Korea.ZTE relies heavily on U.S.-imported chips and optical modules for manufacturing its smartphones. A 2016 report released by a Chinese regime-affiliated think tank found that the firm purchased 53 percent of its chips from American firms, worth $3.1 billion. It predicted that any U.S. sanctions would have a detrimental effect on ZTE and the Chinese tech industry in general.
The recent ZTE ban has only highlighted the innovation gap China still faces as it struggles to produce the chips critical to manufacturing practically all electronic devices. In fact, semiconductors make up one of China’s largest import categories by value.
