Chinese Telecoms Equipment Provider ZTE Begins Layoffs, Rumors Say

ZTE, a Chinese technology company that specializes in telecommunications, has started a round of layoffs involving its wireless research institutes, terminals and other departments, according to a report by China Star Market on February 20.

According to several people familiar with the matter, many employees were informed on January 18 and they would complete resignation procedures before the end of February. “The layoffs in some departments of the wireless research institute are 10%-20%, and the terminal business department is the focus of this layoff,” one ZTE employee revealed.

In addition to the new employees who had only joined the company in the last year or two, other cuts happened amongst the ranks of senior employees who have worked for the company for more than 10 years. “A software development engineer who has been in ZTE for more than 10 years is also on the list this time. The layoffs ratio in my department has exceeded 10% and more layoffs will continue later,” another employee said.

According to sources, ZTE’s personnel structure has been relatively stable in the past, and it took the initiative to optimize this year due to over-recruitment last year. “In the past, ZTE did not lay off employees very much. Some employees left their jobs on their own. It’s very normal. However, in 2022, due to COVID-19, not so many employees left ZTE. In addition, a large number of talents have been recruited in recent years, resulting in the redundancy of personnel, which has led to the downsizing.”

ZTE responded by saying that there is a normal personnel adjustment and reshuffle every year, and that there has been no obvious change this year.

ZTE achieved an operating income of 92.559 billion yuan ($13.5 billion) in the first three quarters of last year, up 10.42% year-on-year, while the net profit was 6.82 billion yuan, up 16.52% year-on-year. In the third quarter last year, the operating income was 32.741 billion yuan, up 6.46% year-on-year, while the net profit was 2.254 billion yuan, up 27.05% year-on-year.

ZTE’s announcement on February 17 showed that Xie Daxiong, chairman of the board of supervisors of the company, plans to reduce no more than 93,000 shares of the company by centralized bidding, accounting for no more than 0.002% of the total shares.

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ZTE is cultivating new growth pillars. According to the report released by TSR, an international consulting firm, ZTE’s MBB (mobile broadband) and CPE (customer-premises equipment) have surpassed Huawei in market share in 2022, ranking first in the world.

At an event in January, Bai Keke, vice-president of ZTE and general manager of mobile internet products at ZTE’s terminal business division, said that the mobile internet business represented by MBB and CPE has become a great starting point for ZTE to achieve its performance goals. Ports, energy, electricity, transportation, vehicle systems, and other industries will be the company’s focus in the future. Regarding the question of whether it will eventually produce cars, Bai said that ZTE is still positioned as a supplier of core components of smart cars.