ZTE gains traction with 25 contracts for 5G following US sanctions

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ZTE booth at the Mobile World Congress in Shanghai in June 2019. (image credit: TechNode/Jiayi Shi)

Chinese telecommunications equipment maker ZTE has secured 25 commercial 5G contracts and plans in the second half of the year to launch its third-generation 5G chip which could significantly reduce carrier costs.

The Shenzhen-based company and fourth-largest telecom equipment maker in the world said on Wednesday that it has worked with more than 60 telecom operators around the world, including China’s three major state-owned carriers⁠⁠—China Mobile, China Telecom, and China Unicom⁠—as well as ⁠France’s Orange, Spain’s Telefonica, Wind Tre of Italy, and Indonesia’s Telkomsel.

Its domestic rival Huawei, the world’s largest telecom gear maker, said Wednesday it had signed 50 5G contracts worldwide.

ZTE was brought to the brink of collapse in April 2018 after a US government ban from buying American technology and components. The Hong Kong-listed company said in its first-quarter earnings report in April that it had to pay a $1 billion fine to evade the sanctions.

The company said in the report that it would continue focusing on its carrier business and was prepared for 5G commercialization.

Bai Yanmin, vice president of ZTE Corporation and general manager of 5G products, told reporters at a press conference in Shanghai on Wednesday that the company’s third-generation 5G chip supports 4G and 5G dual-mode networks.

The chip also simultaneously supports both standalone, a network mode that is built independently without architecture from current systems and therefore allows for 5G enhancements, and non-standalone architectures, he said.

The new solution could reduce 5G network deployment costs for carriers by 40%, according to the company.

ZTE said it has filed more than 3,500 5G-related patent applications to date.

“Currently ZTE invests more than 10% of its revenue in research and development, of which 5G is the key field,” said Bai, adding that the company expected to invest more in that area over the next six months.

In its April earnings report, ZTE forecasted net profit in the first half of up to RMB 1.8 billion (around $260 million), rebounding from the RMB 7.8 billion loss during the same six-month period in 2018.