Huawei may be feeling the sting of US efforts to rein in the Chinese telecom giant.
In April, Huawei reported a 39 percent increase in first-quarter revenue, despite US efforts to dissuade allies from doing business with the firm. But the company now expects its revenue to decline to $100 billion this year from $107 billion last year, founder and CEO Ren Zhengfei said during an event Monday.
Ren blamed the US decision to add Huawei to a list of companies that are essentially banned from buying US-made technology, including the software and microchips the company uses to build its smartphones and infrastructure gear. The bans will cost Huawei around $30 billion in revenue this year and next, Ren said through a translator at a livestreamed discussion that also featured US investor and writer George Gilder and MIT Media Lab founder and early WIRED investor Nicholas Negroponte. He also confirmed a Bloomberg report that Huawei’s phone sales overseas fell 40 percent over the past month.
Ren said he was surprised by the severity of the US actions, and that over the next two years Huawei will ramp up use of its own chips and technologies. But he still wants Huawei to use US technology if possible. He emphasized that he doesn’t blame US companies for Huawei’s situation but US politicians. “We’re not afraid to work with US components, we’re not afraid to use US elements,” he says. But he says other non-US companies might be more cautious about using US technologies in the future for fear of being cut off from suppliers.
Gilder and Negroponte called the US restrictions on Huawei a mistake. “My interest is open information, open science,” Negroponte said. “We value knowledge. We want to build on the people before. The only way this works is if people are open at the beginning and we can all build on each other.”
Asked how censorship in China affects the open exchange of information between China and other countries, Negroponte said that “China must change” and allow companies like Google to offer services in the country. Ren did not answer the question.
US companies also are feeling the sting of the restrictions against selling to Huawei. According to Huawei, the company spent around $11 billion on US technologies last year. Chipmaker Broadcom expects the Huawei restrictions to reduce its revenue this year by $2 billion, the company said last week. According to Reuters, other chipmakers are lobbying the White House to loosen the restrictions. US companies don’t have the sort of access to the Chinese market that they’d like. But losing access to Huawei means even fewer sales to the country.