Huawei CEO says underestimated impact of US ban, sees revenue dip

Ren Zhengfei says he didn’t expect the US’s determination to ‘crack’ the company would be ‘so strong’.

Huawei founder Ren Zhengfei
Huawei founder Ren Zhengfei says he expects revenues at the telecommunications giant he founded to dip after the US government banned the firm from dealing with American companies [Aly Song/Reuters]

Huawei Technologies Co Ltd’s founder and CEO Ren Zhengfei said the impact of a US ban on the Chinese company was more severe than expected and warned that revenue would dip to around $100bn this year and the next.

This is the first time Huawei has quantified the impact of the US action against the company and Ren’s downbeat assessment comes after weeks of defiant comments from company executives who maintained Huawei was technologically self-sufficient.

Huawei had not expected that US determination to “crack” the company would be “so strong and so pervasive”, Ren said, speaking at the company’s Shenzhen headquarters on Monday.

The US has put Huawei on a blacklist that effectively bans US companies from doing business with the Chinese firm, alleging that Huawei’s products could allow China to spy on US communications.

The ban has forced companies, including Alphabet Inc’s Google and British chip designer ARM, to limit or cease their relationships with Huawei.

Smartphone shipments to fall

Huawei’s international smartphone shipments will drop 40 percent, Ren said on Monday, without specifying a period. Bloomberg reported on Sunday that the tech giant was preparing for a 40 percent to 60 percent decline in international smartphone shipments.

Huawei had reported revenue of 721.2 billion yuan ($104.16bn) last year and said a few months ago it expected revenue this year to jump to $125bn.

“We did not expect they would attack us on so many aspects,” Ren said, but added that he expects a revival in the business in 2021.

“We cannot get components supply, cannot participate in many international organisations, cannot work closely with many universities, cannot use anything with US components, and cannot even establish connection with networks that use such components.”

Ren, however, said Huawei will not cut research and development spending, despite the expected hit to the company’s finances, and would not have large-scale layoffs.

Source: Reuters