Despite soaring sales, Huawei is ‘preparing for the worst’

The logo of China's Huawei Technologies Co is displayed near the US embassy in Kuala Lumpur, Malaysia, 17 June 2019. [EPA-EFE/FAZRY ISMAIL]

The Chinese telecommunications giant Huawei is ‘preparing for the worst but hoping for the best’ in the run up to 19 August, the expiration date for the temporary reprieve on the US trade ban of Huawei equipment, according to the company’s Vice-President for Europe, Abraham Liu.

Meanwhile, the company has managed to fend off risks to its profit margins in the midst of a continued US campaign against the company. Revenues are up 23% for the first half of 2019 to 401 billion CNY (€52bn), with a net profit margin of 8.7%, Huawei Chairman Liang Hua announced in Shenzhen on Tuesday (30 July).

“Given the situation, you might think that things have been chaotic for us. But that’s far from the case,” Liang said. “We have been working hard to ensure smooth operations, and our organization is as sound as ever.”

“Our core products have not been affected.”

Ren Zhengfei: 'Very likely' Huawei products will be used in UK core 5G networks

Huawei 5G equipment will most probably be used in core aspects of the UK’s future 5G network infrastructure, the founder of the Chinese telecommunications giant, Ren Zhengfei has said. His claim runs contrary to the previous stance held by the UK cabinet, which was to permit the company access only to ‘non-core’ aspects of the country’s 5G networks.

However, Liang added that immediately following the US’s placement of Huawei’s on its entity list of restricted products, there was an “impact on smartphone sales in the non-China market.”

He added that Huawei was able to recover around 80% of its lost sales following the blacklisting, after the US issued a temporary relief that permitted the continued sale of American components to Huawei.

The expiration date for the relief period is August 19 and Liang said on Tuesday that it the company is doing everything it can to mitigate the supply chain risks associated with the prospect of facing another ban.

On the subject of business continuity planning, Huawei is carrying out a stockpiling of specific components that could be impacted by future US trade restrictions – including on ‘mechanical parts for consumer products.’

A Huawei spokesperson told EURACTIV that the measures were being put in place in order to “refute potential fears that Huawei would not be able to provide specific components” in the future, adding more generally that the company does not want to be a pawn in any future trade deal with the US.

On Thursday, the company’s VP for Europe, Abraham Liu, said that while Huawei have recruited an extra 6,000 people to work on patching the holes that emerged in the firm’s supply chain as a result of the trade restrictions, good progress has been made.

Disruption to the global supply chain as a result of the US moves has been limited, Liu added, with 70% of the so-called ‘holes’ being fixed.

Huawei blocks over a hundred products from market due to security concerns

The Chinese telecommunications giant Huawei has blocked more than a hundred products from being released on the market due to concerns that the items do not meet security standards, EURACTIV has learnt.

In Huawei’s ongoing stand off with the American government, earlier this week the company’s head of communications, Catherine Chen, wrote a scathing attack against the US’s Deputy Assistant Secretary of State Robert Strayer, for his part in the American campaign against Huawei.

Writing in EURACTIV, Chen said that Strayer’s “thoughts and ideas are not grounded in reality” and that he “has devoted himself to an outdated understanding of mobile technologies.” The US government are yet to respond directly to Chen’s claims.

Meanwhile, in Europe, Huawei continues to exercise its influence on the 5G market. During a media roundtable in Brussels recently, Chen revealed that the majority of 5G contracts already secured by the company are with European contractors. The company has agreed 50 contracts globally, including 28 with European operators.

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