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Underestimated impact of US Huawei ban, sees US$100 billion revenue drop

Founder and CEO of Huawei Technologies, Ren Zhengfei, said on Monday (June 17) that the effect of U.S. sanctions on the Chinese business was more severe than anticipated, warning that income would fall to about US$ 100 billion this year and next year.

This is the first occasion that Huawei has quantified the effect of the U.S. intervention against the business, and Ren’s downbeat evaluation has been technologically self-sufficient after decades of challenging remarks from business managers who retained Huawei.

Huawei had not anticipated US determination to “break” the business would be “so powerful and omnipresent,” Ren said, talking at the Shenzhen office of the company.

The business revealed last year income of 721.2 billion yuan (US$ 104.16 billion), up 19.5% from 2017.

“We didn’t imagine that on so many elements they would invade us,” Ren said but noted that in 2021 he hopes a resurgence in the company.

“We can’t get the supply of parts, we can’t be involved in many international organisations, we can’t work closely with many universities, we can’t use anything with US components, and we can’t even connect to networks that use such components,” replied Ren.

“We will regain our vitality in 2021 and (proceed) delivering facilities to human society.” Huawei will not split expenditure on research and development given the anticipated financial strike of the company, Ren said.

However, he introduced, over the next two years, the business will slash manufacturing as it clashes with the U.S. effort to separate the industry globally.

“The business will split manufacturing by $30 billion over the next two years,” Ren said.

Huawei’s global Android sales this year fell by 40%, he admitted.

In May, the U.S. government placed Huawei on a trade blacklist that prevents U.S. providers from doing company with it because worries about national security are what Washington states.

Ren said the constraints at the moment “may be poor, but only mildly” the development of the company.

The administration of President Donald Trump fundamentally prohibited Huawei from the large US industry and prohibited American electronics businesses from providing essential parts to the Chinese company without Washington’s consent.

Washington worries that facilities constructed by Huawei, the world’s leading manufacturer of telecommunications appliances and smartphone number two, could be used for espionage by the Chinese government.

The Trump administration is also pressuring other countries to ban Huawei equipment from their networks, especially in the forthcoming roll-out of super-fast 5 G networks, a venture where Huawei was supposed to take a significant position. The constraints led businesses, including Google’s Alphabet Inc and ARM’s British chip developer, to restrict or discontinue their relationship with Huawei.

The U.S. initiative has already encouraged a number of significant technology firms to stop collaboration with Huawei, including significant providers of semi-conductors and products such as Facebook and Google.

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