[The company, one of China’s proudest corporate champions, has become a focal point in the fierce conflict that has engulfed the world’s two largest economies. Washington handed down the restrictions on American firms’ dealings with Huawei after Chinese and American negotiators failed in early May to reach an agreement to end their yearlong tariff war.]
By Raymond Zhong
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Huawei’s founder and chief executive, Ren
Zhengfei, in Shenzhen, China,
on Monday. The company denies American
allegations that its hardware
represents a security threat. Credit Hector
Retamal/Agence
France-Presse — Getty Images
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SHANGHAI
— Huawei, the embattled
Chinese technology giant, is slashing its sales expectations for this year by
around $25 billion as the Trump administration’s clampdown on the firm takes a
bite out of its business.
Speaking at an event on Monday at Huawei’s
headquarters in the Chinese city of Shenzhen, the company’s chief executive,
Ren Zhengfei, said he expected annual revenue to come in at about $100 billion
both this year and next before recovering in 2021.
Last year, Huawei took in more than $105
billion in sales, helped by its fast-growing smartphone business. Mr. Ren said
in January that he predicted another bumper year in 2019, with sales jumping to
$125 billion.
But that was before the United States last
month cut Huawei off from the American chips, software and other parts that go
into its handsets and telecommunication equipment, saying that the firm
represented a threat to national security. American officials have long said
that Huawei’s products could be used by Beijing to disrupt or sabotage digital
communications, charges that the company vehemently rejects.
Washington has taken its case against the
Chinese giant to many of its allies overseas, leading governments around the
world to reconsider whether the firm should be allowed to build next-generation
5G telecom infrastructure.
The company, one of China’s proudest
corporate champions, has become a focal point in the fierce conflict that has
engulfed the world’s two largest economies. Washington handed down the
restrictions on American firms’ dealings with Huawei after Chinese and American
negotiators failed in early May to reach an agreement to end their yearlong
tariff war.
The Trump administration had already inflamed
tensions with China late last year by arranging the arrest in Canada of Mr.
Ren’s daughter and Huawei’s chief financial officer, Meng Wanzhou, as part of a
criminal case against her and the company related to American allegations of
theft of industrial secrets and violations of sanctions against Iran. Huawei
has denied wrongdoing.
President Trump is expected to meet with
China’s top leader, Xi Jinping, at a Group of 20 meeting in Japan this month,
and clemency for Huawei could be part of a broader compromise on tariffs. But
lawmakers from both parties in Washington have urged the Trump administration
to keep the question of Huawei’s fate separate from the trade negotiations.
They say that easing back on Huawei would lead other governments to believe
that American officials are not sincere in arguing that the company is a
security menace.
At the event on Monday, Mr. Ren said that
Huawei had not expected the United States’ actions to undermine the company as
severely as it had. Other Huawei executives have said the company stockpiled
computer chips and electronic components in anticipation that it may one day be
unable to purchase them from American suppliers.
“We did make some preparations,” Mr. Ren said
on Monday. “It’s like we’re on a damaged airplane. We only protected the heart.
We only protected the fuel tank. We did not protect other, smaller parts.”
The company has also said it is developing its
own operating system to replace Google’s Android in its handsets. But it
remains to be seen whether consumers in Europe, for instance — where Huawei has
become a giant smartphone seller — will want to use devices that run on
unfamiliar and potentially less-tested software.
Huawei is expecting its smartphone sales
outside China to crater by two-fifths, Mr. Ren said on Monday. The company is
not publicly traded, but it releases some financial results and forecasts as a
gesture toward openness.
Follow Raymond Zhong on Twitter: @zhonggg
