ZTE is looking for backers for its eye-tracking smartphone. (Photo : Getty Images)
Chinese telecom equipment maker ZTE, which is facing U.S. trade sanctions that could seriously disrupt its supply chain, is cutting around 3,000 jobs, including a fifth of positions in its struggling handset business in China, according to company sources.
The sources told Reuters that the Shenzhen-based firm, one of the world's biggest manufacturers of telecom gear, is slashing around 5 percent of its 60,000 global workforce.
Its global handset operations will also see a cut of 600 jobs, or 10 percent of the total, of which most are in China where it has been losing market share, Reuters reported on Friday.
"Cuts in the handset business in China will be beyond 20 percent," said a senior executive privy to the information on the layoffs, which are scheduled to be completed within the first quarter of this year.
A local manager in one of the company's overseas branches told Reuters that a 10 percent quota to lay off staff in his department by the end of January.
"I was also given names that must go because they had tried to apply for jobs at [competing telecom firm] Huawei and are therefore branded as 'unstable factors'," said the manager, who declined to be named for the report.
The company declined to comment.
The ZTE smartphone has a significant presence in the United States, where ZTE's 10 percent share of the market makes it the country's fourth-largest vendor.
The U.S. Commerce Department announced in March that it will ban exports by U.S. companies to ZTE for allegedly breaking Washington's sanctions on sales to Iran.
The ban has yet to come to effect due a series of reprieves, the last of which expires at the end of February, but if it does go ahead the company's supply chain would be severely handicapped. It sources a third of its components from U.S. companies including Qualcomm, Microsoft and Intel.
This uncertainty has weight heavily over the company over the past year, which its global smartphone shipments dropping to 36.5 percent compared with 2015, according to industry database IDC.
In his New Year speech to employees, ZTE chairman Zhao Xianming said that the company, which has annual sales of more than $15 billion, had "encountered its biggest crisis in its 31-year history," according to a transcript posted on the official ZTE WeChat account.
