Hit by United States curbs, Huawei expects 2019 revenue to shrink

Ruben Fields
June 19, 2019

HUAWEI'S founder said on Monday the Chinese telecom giant's overseas smartphone sales have tumbled since the USA last month threatened to blacklist the company, and he warned the embattled firm would slash production to weather the United States drive to isolate it.

Ren, 74, said Huawei planned to cut production by $30 billion over the next two years to ride out the storm.

Ren confirmed Huawei's overseas smartphone sales had dropped 40%, but did not specify a time period. In an interview with Caixin earlier this month, he said he was "very relaxed", as "it won't take so long" for Huawei to "achieve victory".

A similar USA ban on China's ZTE Corp, nearly crippled business for Huawei's smaller rival early previous year before the curb was lifted.

Last month, US President Donald Trump put the Chinese telecoms giant on an "entity list", which bans American companies from doing business with the firm without government approval. However, he is expecting its global smartphone shipments to fall by 40%. He provided no specifics but said that once all was done, the firm would "become stronger".

But Ren, who compared Huawei to a damaged but still-flying aircraft, added that he expected the company to soon be back on track. "We believe that these things can not stop us from moving forward". However, Ren Zhengfei claimed that the company would "regain vitality" in 2021.

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Ren, 74, had been considered one of the most low-profile Chinese entrepreneurs until he began doing frequent interviews after the USA took a series of actions that impacted the company and his family.

However, some countries have blocked telecoms companies from using Huawei products in 5G mobile networks. Huawei has said its work does not pose any threats and that it is independent from the Chinese government.

Huawei has brought a lawsuit in the US this March challenging the constitutionality of a national security law which prevents the USA government and its contractors from using Huawei equipment.

Nicholas Negroponte, co-founder of the Massachusetts Institute of Technology's Media Lab, said at the dialogue in Shenzhen that the U.S. is not an absolute leader in semiconductors anymore, and it is impossible for the USA administration to use Chinese companies' reliance on foreign semiconductor products to pressure them. "So it's about something else, and this trade war has got to end".

Those fears have revolved in large part around Ren's background as a former Chinese army engineer, and questions over the privately-held Huawei's corporate ownership structure, which some critics say is unusual and opaque.

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