Huawei founder and CEO Ren Zhengfei once predicted the Chinese tech giant would be hit so badly by the U.S. ban that it could earn US$30 billion less revenue for the year. That amount was later reduced to US$10 billion. On Tuesday (Nov 5), some five months after Mr. Ren first made the shocking prediction, Huawei revised down the total impact amount again.
Will Zhang, president of corporate strategy, now said Trump’s sanction move would actually knock less than US$10 billion off Huawei’s revenue. In fact, Huawei Technologies Co. expects its smartphone shipments to grow 20% next year (2020) – even if Google’s software continues to be blocked from its Android phones.
Some 6 months after Washington officially banned Huawei, the Chinese company is still alive and kicking. That’s a big deal considering key U.S. components and software like Google’s Android operating system, semiconductor design tools from Synopsys Inc. and Cadence Design Systems Inc. and radio frequency chips made by Qorvo and Skyworks remain off limit to Huawei.
In a latest twist, Huawei reveals that sourcing the hardware for smartphone manufacturing wasn’t a problem because of the availability of global supply. Mr. Zhang said – “There are many ways for our U.S. partners to find global solutions, rather than shipped from a single US-based source.” Apparently, the company has changed its strategy.
Based on the company’s new model which includes best and worst case scenarios, its smartphone growth could rise to roughly 20% under a moderate scenario. The best case projection would see a growth of a whopping 40%. Even in the worst case scenario, the smartphone shipment could see a small growth, something probably unimaginable to the Trump administration.
Huawei, which derives about half of its revenue from its smartphone business, has so far managed to sustain an admirable growth despite ongoing tech war between China and the U.S. After tech giant Huawei, the U.S. Commerce Department had added 28 Chinese public security bureaus and companies to a U.S. trade blacklist, apparently over the treatment of Uighur Muslims.
Those 28 Chinese agencies and companies included 8 of China’s top artificial intelligence (AI) companies. Hikvision, Dahua Technology and Megvii Technology were among 8 commercial groups on the list, all of which specialise in facial-recognition technology. Using human rights as the reason to punish Beijing and the Chinese companies was both hilarious and hypocritical.
Human rights groups and the UN say China has rounded up and detained more than 1-million Uighurs and other ethnic minorities in vast detention camps. And Trump administration had used that as the justification despite the fact that the United States had withdrawn from the UN Human Rights Council (UNHRC) in June 2018.
Heck, in the latest China-US tech war, even short video-sharing app TikTok has become the latest Chinese firm caught in the U.S. regulatory crossfire. TikTok, owned by Beijing ByteDance Technology Co, is now being investigated by Washington for the potential of “national security” threat, after its US$1 billion acquisition of U.S. social media app Musical.ly.
According to analytics firm Sensor Tower, TikTok is one of the world’s most popular apps with more than 1 billion downloads globally. The app, the first Chinese-developed consumer app to achieve international scale, is currently ranked fourth behind Facebook, Instagram and Snapchat as the most used social app in the U.S. Google Play Store.
Anyway, the worst could be over soon for Huawei, if the remarks by Commerce Secretary Wilber Ross is any indicator. As talks between China and U.S. over a long-disputed trade deal are moving forward positively, Ross said on Sunday (Nov 3) that licenses for United States companies to sell components to the Chinese telecom giant are coming “very shortly”.
By now, Trump should realise that its efforts to contain the Huawei’s meteoric rise may not be working. Last month (Oct 16), the tech giant announced it had signed more than 60 commercial 5G contracts “with leading global carriers” and shipped more than 400,000 5G base stations to global markets to date – clearest proof that it continues enjoying rapid growth despite sanctions and restrictions.
Huawei also revealed that “more than 700 cities, 228 Fortune Global 500 companies, and 58 Fortune Global 100 companies had selected Huawei as their partner for digital transformation.” Revenue for the first three quarters of 2019 was 610.8 billion Yuan (US$86.2 billion), up 24% year-on-year, despite the Chinese company being blacklisted.
In mainland China, its smartphone shipments jumped 66% in the third quarter, although it only rose about 18% abroad. Not only is Huawei unstoppable, the ban has hurt U.S. corporations. Ross admitted that the government has received260 requests from American companies to be granted exemption so that licenses could be approved for them to do business with China.
– Finance Twitter