Technology

Huawei braces for 60% fall in international sales

Chinese phone maker expects US sanctions to hit revenue by $30bn over next two years

Huawei founder and chief executive Ren Zhengfei said he was surprised at the extent to which Washington had attacked his corporation. Photograph: Hector Retamal/AFP/Getty

Mon Jun 17 2019 - 09:37

Huawei Technologies founder Ren Zhengfei expects US sanctions to curtail its revenue by about $30 billion (€26.7 billion) over the coming two years, wiping out the networking giant's growth by withholding critical American technology.

Sales at China’s largest technology company are likely to remain stagnant at about $100 billion in 2019 and 2020, the billionaire said during a panel discussion, quantifying for the first time the hit from a plethora of Trump administration restrictions.

The 74-year-old chief executive said that Huawei will aim to maintain its research and development budget.

Mr Ren said on Monday he was surprised at the extent to which Washington had attacked his corporation. Huawei is said to be preparing for a fall of as much as 60 per cent in overseas smartphone shipments, as Google cuts it off from Android updates and apps from Gmail to Maps.

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The founder has conceded that Trump administration curbs will cut into a two-year lead it has painstakingly built over rivals like Ericsson and Nokia.

"We didn't expect the US would so resolutely attack Huawei. We didn't expect the US would hit our supply chain in such a wide way – not only blocking the component supplies, but also our participation in international organisations," Mr Ren told the panel in a broadcast from Huawei's home city of Shenzhen. "That will make our revenue for this and next year around $100 billion."

Espionage fears

The US blacklisted Huawei, which it accuses of aiding Beijing in espionage, last month and cut it off from the US software and components it needs to make its products. The ban hamstrings the world’s largest provider of networking gear and the second-largest smartphone vendor just as it was preparing to vault to the forefront of global technology.

The move has rocked chipmakers in the US and Europe as the global supply chain comes under threat. The ban could also disrupt the rollout of 5G wireless globally, undermining a standard that’s touted as the foundation of everything from autonomous cars to robot surgery.

But Huawei has said it will ramp up its own chip supply and find alternatives to keep its edge in smartphones and 5G.

“We didn’t expect the damage to be this serious. We did make some preparations, like the damaged plane I talked about. We only protected the engine and fuel tanks, but failed to protect other parts,” Mr Ren said. But “we will be reborn by 2021”. – Bloomberg

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