Huawei to lose $30bn as US restrictions take toll

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 18 Jun 2019

Chinese telecommunications equipment maker Huawei is set to lose $30 billion in revenue as a result of restrictions imposed by the US government.

This was revealed by Huawei founder and CEO, Ren Zhengfei, in a panel discussion at the company’s Shenzhen headquarters yesterday.

This is the first time under fire Huawei has quantified the impact of the US action against the company.

Despite political headwinds, in March this year, Huawei said its revenue grew 19.5% in 2018, surpassing $100 billion for the first time.

However, in his discussion, Ren cautioned that various US restrictions will take $30 billion off its top-line over the next two years, with revenue expected to decline to about $100 billion this year.

Ren said Huawei will reduce capacity and expects revenue of about $100 billion annually for the next two years, compared with $105 billion in 2018. In February, he said the company was targeting $125 billion in 2019.

“We never thought that the US’s determination to attack Huawei would be so strong, so firm,” said Ren in the panel discussion.

He added Huawei’s overseas cellphone sales will drop by 40%. Nonetheless, he pointed out the Chinese market is growing rapidly and the company will not allow restrictive measures to curb its research and development.

The US, which put Huawei on an export blacklist citing national security issues, has for months been rallying its allies to cut Huawei out of planned 5G networks, citing “national security threats” due to the company’s close ties to the Chinese government.

The blacklist has seen companies, including Alphabet’s Google and British chip designer ARM, limit or cease their relationships with the Chinese company.

Huawei has denied installing any backdoors in its networking equipment for alleged government spying.

Earlier this month, China summoned global technology companies for talks to warn they could face dire consequences if they co-operate with the Trump administration’s ban on sales of key American technology to Chinese companies.

Last month, Huawei filed a motion for summary judgment as part of the process to challenge the constitutionality of Section 889 of the 2019 National Defence Authorisation.

It also called on the US government to halt its state-sanctioned campaign against Huawei.

Huawei is the second biggest smartphone maker in the world behind Samsung. It recently overtook Apple, which is now number three in the smartphone market. Huawei is the world’s biggest telecommunications equipment maker, leading in technologies like 5G.