Huawei expects $30B revenue hit, 60M fewer phones sold due to US ban
Founder Ren Zhengfei says Huawei will cut back on production while it works to find alternatives including developing its own smartphone OS, forcing a drop in revenues of $30 billion.
Ren Zhengfei, founder of Huawei, has predicted that the US ban on his company will mean its revenues will drop by $30 billion and smartphone sales will fall by up to 60 million devices. He said that the figures will be the same for this year and next, but that the company's profits would rise again after 2020.
"In the next two years, I think we will reduce our capacity," he said in a speech translated from Mandarin by Huawei and seen by CNBC, "our revenue will be down by about $30 billion compared to forecasts, so our sales revenue due this year and next will be about $100 billion."
Huawei sold 206 million phones in 2018, with almost half of that being international sales outside its home country of China.
Currently, the US government has blocked Huawei from using American technology, though at times it has eased those restrictions.
CNBC says that Huawei has been stockpiling US components needed for its smartphones, but this can only be a short-term measure. It also doesn't address how Google has revoked Huawei's Android licence, meaning that its phones cannot use services ranging from Google search to Gmail.
"We didn't expect the damage to be this serious," said Ren Zhengfei in a discussion reported by Bloomberg. "We did make some preparations, like [a] damaged plane [analogy]. We only protected the engine and fuel tanks, but failed to protect other parts."
Huawei is due to launch its new Honor 20 phone across Europe on June 21, but Bloomberg reports that some cell carriers in France have dropped plans to sell and support it.
Nonetheless, Zhengfei says that over the next two years, the company will recover from the losses caused by the ban.
"We are going to do a lot of switch over of different product versions that will take time to ramp up," he said, "and it will take some time to test whether that works. After that step, we will be stronger. We are strong, I think there is no way we can be beaten to death."
Zhengfei did not detail how the company will replace US sources of components, but Huawei is developing its own alternative to the iOS and Android operating systems.
Ren Zhengfei, founder of Huawei, has predicted that the US ban on his company will mean its revenues will drop by $30 billion and smartphone sales will fall by up to 60 million devices. He said that the figures will be the same for this year and next, but that the company's profits would rise again after 2020.
"In the next two years, I think we will reduce our capacity," he said in a speech translated from Mandarin by Huawei and seen by CNBC, "our revenue will be down by about $30 billion compared to forecasts, so our sales revenue due this year and next will be about $100 billion."
Huawei sold 206 million phones in 2018, with almost half of that being international sales outside its home country of China.
Currently, the US government has blocked Huawei from using American technology, though at times it has eased those restrictions.
CNBC says that Huawei has been stockpiling US components needed for its smartphones, but this can only be a short-term measure. It also doesn't address how Google has revoked Huawei's Android licence, meaning that its phones cannot use services ranging from Google search to Gmail.
"We didn't expect the damage to be this serious," said Ren Zhengfei in a discussion reported by Bloomberg. "We did make some preparations, like [a] damaged plane [analogy]. We only protected the engine and fuel tanks, but failed to protect other parts."
Huawei is due to launch its new Honor 20 phone across Europe on June 21, but Bloomberg reports that some cell carriers in France have dropped plans to sell and support it.
Nonetheless, Zhengfei says that over the next two years, the company will recover from the losses caused by the ban.
"We are going to do a lot of switch over of different product versions that will take time to ramp up," he said, "and it will take some time to test whether that works. After that step, we will be stronger. We are strong, I think there is no way we can be beaten to death."
Zhengfei did not detail how the company will replace US sources of components, but Huawei is developing its own alternative to the iOS and Android operating systems.
Comments
The idea of a global supply chain has taken a hit and everyone will suffer but those with more to lose are in the U.S.
I think Broadcom put a number of $2 billion usd in lost revenues. Some companies have lost almost half their revenues. One U.S senator said U.S jobs would be lost forever.
We'll see how it plays out in the short term though as tariffs in general are already hurting U.S business. Hundreds of companies have written to the government asking for tariff increases to be stopped.
If you want to make China 'bleed' and change, as you say, you (and anyone else who shares that opinion) can contribute to that directly by refusing to buy anything Made in China.
However, I doubt you are willing to do that and probably have a fair few products that are made in China or require Chinese patents.
In the absence (a very long absence) of national security evidence to actually support Trump's claims, together with his very open admittance to seeing Huawei possibly included in a trade deal, the conclusion is clear and countries around the world have taken note.
Then there is this angle:
https://www.reuters.com/article/us-huawei-tech-usa-lobbying/u-s-chipmakers-quietly-lobby-to-ease-huawei-ban-sources-idUSKCN1TH0VA
Unbelievable...
BTW, as much as I loath and detest Trump, he is right about China and Huawei. It's an established FACT that Huawei has very close PRC ties, and by their own LAWS, is obligated to undertake any actions the state demands of them, including espionage, with threat of imprisonment of top officials if they attempt to deny the request.
Also, let's not forget them taking direct research funding from the Chinese military, and also providing the surveillance technology now enslaving citizens in multiple South African countries.
Your ignorance is unbelievable.
https://www.baldingsworld.com/2019/06/17/is-china-exporting-authoritarianism/
Kudos to whomever in the U.S. Government that decided to use Huawei as a pressure point in the trade negotiations, and not just security concerns. I doubt that they could have imagined how badly China overreacted; almost like Huawei was the CCP's most favored child.
and any tariffs “paid” will be paid by US, the American consumer. So that blows. More tax increases for all! Not a yay moment.
People like you and the other feller had no problem accepting US intelligence findings when they told us Russia helped get Trump elected. But now that your heroes are the subject of scrutiny all of a sudden you refuse to accept that their investigations made it a good bet that the chinese communist party cannot be trusted.
We call this “cognitive dissonance”.
Seriously. How do these astroturfers expect us to forget this fact?
And he isn't as crazy as some of the iKnockoff Knights I've seen.
Some are hoping for the fall of the United States just to see Apple go down with them.
Some are hoping Apple is targeted for some reason, even though Apple has nothing to do with this mess.
Others claim Huawei will never spy and is a moral company even though they run android.
So little in fact that no foreign state that has asked for evidence, actually received any.
Now the U.S is reaping the consequences of its 'national security' actions with many EU foreign ministers asking for an independent investigation into the oil tanker attacks.
With Huawei we are talking pure unadulterated protectionism and absolutely nothing else.
People like you need to get a fucking clue, or STFU.
Great find, thanks for posting this! Unfortunately, it seems content like this is becoming frowned upon more and more because of the successful brainwashing China has managed to accomplish upon the fools of us within North America.
China has awakened the sleeping giant. Xi doesn’t want to acknowledge it yet — he’s in a bind himself — but he knows that he pushed a tad too far, and he sees the writing is on the wall. The faster they can get their act together, the better for them (and everyone else). The ball is in China’s court.
iKnockoff Knights are acting strangely to this news. It seems they've waved the white flag and finally realized Google has been spying on them and are now praising Huaweis developing OS and hoping it takes down Apple as well for some reason. Thinking Huawei is some sweet innocent angel that would never spy(while ignoring Apple altogether).
What is your opinion on Huawei being forced to code an OS?
I think it'll just be another iPhone knockoff but will it be the next Tizen and fail? Will it hurt Google at all?
Here's what the Australians have to say about that.
Of course, I've posted this before, but you ignore it because you can't comprehend what National Security Services do.
https://www.reuters.com/investigates/special-report/huawei-usa-campaign/
"CANBERRA
In early 2018, in a complex of low-rise buildings in the Australian capital, a team of government hackers was engaging in a destructive digital war game.
The operatives – agents of the Australian Signals Directorate, the nation’s top-secret eavesdropping agency – had been given a challenge. With all the offensive cyber tools at their disposal, what harm could they inflict if they had access to equipment installed in the 5G network, the next-generation mobile communications technology, of a target nation?
What the team found, say current and former government officials, was sobering for Australian security and political leaders: The offensive potential of 5G was so great that if Australia were on the receiving end of such attacks, the country could be seriously exposed. The understanding of how 5G could be exploited for spying and to sabotage critical infrastructure changed everything for the Australians, according to people familiar with the deliberations.
Mike Burgess, the head of the signals directorate, recently explained why the security of fifth generation, or 5G, technology was so important: It will be integral to the communications at the heart of a country's critical infrastructure - everything from electric power to water supplies to sewage, he said in a March speech at a Sydney research institute.
Washington is widely seen as having taken the initiative in the global campaign against Huawei Technologies Co Ltd, a tech juggernaut that in the three decades since its founding has become a pillar of Beijing’s bid to expand its global influence. Yet Reuters interviews with more than two dozen current and former Western officials show it was the Australians who led the way in pressing for action on 5G; that the United States was initially slow to act; and that Britain and other European countries are caught between security concerns and the competitive prices offered by Huawei."
Go back to burying your head in the sand, and pushing Huawei, if that's makes you feel better, but for some of us, we are well aware of the risks.
LOL. You actually know nothing, Jon Snow. Just an astroturfer campaign.