17 Jun 2019

Huawei founder says firm to cut output amid US curbs

10:29 pm on 17 June 2019

Huawei founder and CEO Ren Zhengfei said the impact of a US ban was more severe than expected and warned that revenue would dip to around $US100 billion this year and the next.

Huawei founder and CEO Ren Zhengfei speaks as he hosts a panel discussion on technology, markets and enterprise in Shenzhen, Guangdong province, on June 17, 2019.

Huawei's chief executive Ren Zhengfei says the company did not expect the United States would "attack us on so many aspects". Photo: AFP

This is the first time that the Chinese company has quantified the impact of the United States action against the company and Mr 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", Mr Ren said, speaking at the company's Shenzhen headquarters today.

The United States has put Huawei on a blacklist that effectively bans American 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.

Huawei's international smartphone shipments will drop 40 percent, Mr Ren said, 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 $US104.16b ($NZ159.9b) last year and said a few months ago it expected revenue this year to jump to $125b.

"We did not expect they would attack us on so many aspects," Mr 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."

Mr 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.

The Huawei founder had previously downplayed the impact of the US restrictions on the Chinese firm.

However, the actions by the US have prompted tech companies around the world to retreat from Huawei.

Google barred Huawei from some updates to the Android operating system, meaning new designs of Huawei smartphones are set to lose access to some Google apps.

Japan's Softbank and KDDI have both said they will not sell Huawei's new handsets for now.

Surveillance fears

Washington's clampdown on Huawei is part of a broader push-back against the company, over worries about using its products in next-generation 5G mobile networks.

Several countries have raised concerns that Huawei equipment could be used by China for surveillance, allegations the company has vehemently denied.

- Reuters / BBC