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© Huawei General | August 26, 2019

Huawei: U.S. efforts may lower smartphone revenue by billions

Huawei said on Friday the impact of U.S. trade restrictions on its business will be less than what it initially feared, though the curbs could push its smartphone unit’s revenue lower by about USD 10 billion this year, according to a Reuters story.

Huawei Technologies’ USD 100 billion business has suffered since Washington added the company, the world’s second-largest smartphone maker, to its Entity List in May. The move was designed to weaken Huawei’s access to essential U.S. components and technology. Regarding the impact of the U.S. strategy, Huawei founder and CEO Ren Zhengfei predicted in June the blacklisting would hit the company’s revenue by USD 30 billion, leaving it without any topline growth for 2019. “It seems it is going to be a little less than that. But you have to wait till our results in March,” Eric Xu, Huawei’s deputy chairman, said at a news conference to introduce new artificial intelligence chips at its headquarters in Shenzhen. Xu also said that Huawei’s consumer business group, which includes the smartphone segment, is developing an operating system of its own in preparation for the worst-case scenario of being stripped of essential Google Android apps and is doing “much better” this year than initially feared. “But a (sales) reduction of more than USD 10 billion could happen,” Xu said. Huawei’s consumer business group reported revenue of 349 billion yuan in 2018, or about USD 49 billion. Spurred by promotions and patriotic purchases, Huawei’s smartphone sales in China surged by a nearly a third compared to a year ago to a record high in the June quarter, helping it more than offset a shipments slump in the global market. Huawei said last month the consumer business group turned in revenue of 221 billion yuan (approx. USD 31 billion) in the first half of 2019. In a temporary relief to Huawei, Washington said it will extend a reprieve that permits Huawei to buy from U.S. firms in order to supply existing customers by 90 days, while adding more than 40 of Huawei’s units to its economic blacklist. Xu said the reprieve was “meaningless” to Huawei, whose employees are “fully prepared” to live and work with the ban. The company has said the recent development of its own chips is strictly an effort to reduce its dependence on foreign chip suppliers and the company is not planning to become a chip vendor.
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September 18 2019 10:52 am V14.4.0-2