[tedsanders]

Do you know of any analysis on the projected impacts?

On the one hand, ZTE buys a lot of semi components from the US, and if ZTE craters, those sales disappear.

But on the other hand, if ZTE craters, then other NEMs and handset makers would presumably replace those sales. The thousands of 5G base stations that AT&T and friends are building are still going to get built whether it's ZTE or someone else supplying the components. So if ZTE disappears, it's not like demand for the low-level components disappears too - in theory, those demanded supplies should just get rerouted through other intermediate suppliers, right?

So to first order, I'd think the the effects would be zero. To second order, maybe there would be changes in supplier mix, as Huawei's favorite supplier gains relative to ZTE's favorite supplier. And maybe the loss of ZTE does cause some near-future work to be delayed, shrinking the short-term market slightly. And maybe the loss of a player concentrates more market power in the ZTE-level of the supply chain, drawing profits from the carriers above and the component makers below. And of course there will be costs caused by rerouting supply chains and inventories and the uncertainties therein. But I have no clue how marginal or substantial those second-order costs might be.

[fspeech]

For the same reason it is surprising that the Chinese government would not let ZTE go under. Without ZTE, Huawei would likely be able to charge higher prices around the world. ZTE's know-how and business relationships can be sold off to other domestic entities. The employees of ZTE will find jobs elsewhere. The failure of ZTE would then set an example to other Chinese companies for being dependent on US suppliers.

If the failure of ZTE is not necessarily a loss to the Chinese government, we can infer that it is not necessarily a gain to the US government, as the gp claimed but using the logic of zero-sum.