Huawei describes US sanctions as lose-lose

Ken Hu, Huawei Rotating Chairman

Rotating Chairman of Huawei, Ken Hu has said that the US sanctions had a negative effect on both Huawei and its US suppliers who lost out on billions of dollars worth of business from Huawei in 2020.

He speaking at an earning briefing of the company, he noted that on annual basis, Huawei purchases components worth between US$10 billion and US$20 billion from US suppliers but in 2020 all that was lost those suppliers due to the sanctions.

“For the industry it has been a lose-lose situation. It [is] very unfair and caused a lot of damage to us, and our upstream suppliers are also suffering,” he stated.

Hu stated that due to the sanctions, Huawei’s growth slowed in 2020, with China accounting for a larger portion of its revenue as trade restrictions took a toll on its non-domestic performance.

He said whereas revenue in China grew 15 per cent to CNY584.9 billion, it fell in all other regions, down 12.2 per cent to CNY180.8 billion in EMEA; 8.7 per cent to CNY64.4 billion in Asia Pacific; and 24.5 per cent in the Americas to CNY39.6 billion.

The Huawei Chair noted the vendor’s revenue was still higher in 2020 despite an overall negative environment, hailing measures to diversify its supply chain along with heavy investment in research and development for the progress.

Per the reports, Huawei’s net profit was 3.2 per cent higher at CNY64.6 billion ($9.86 billion), with revenue rising 3.8 per cent to CNY891.4 billion. The share of revenue from China increased from 59 per cent in 2019 to 65 per cent.

In 2019, Huawei booked a 5.6 per cent increase in profit and 19.1 per cent rise in revenue.

Consumer weakness
Hu said its smartphone business “fell short of expectations”, as it was impacted by a shortage of components caused by “unfair” US sanctions. But he noted its Consumer Business Group revenue was up 3.3 per cent to CNY482.9 billion with the weakness offset by other devices including tablets, wearables, smart screens and PCs.

He said Huawei hasn’t been able to see a clear picture on the future of its smartphone business, making it hard to make forecasts. However, he asserted the vendor’s next flagship models will be released as planned, including the second generation of its foldable smartphone.

“The overall direction of our strategy has not changed. We will continue to push ICT infrastructure, as we see an inevitable trend towards digital transformation. We will also focus on improving the consumer experience across different platforms”.

Revenue at its carrier group was flat at CNY302.6 billion, with enterprise up 23 per cent to CNY100.3 billion.

R&D investment stood at $21.8 billion, 15.9 per cent of overall revenue, and 3,000 staff were added taking its global total to 197,000.


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