Network hardware and services supplier Huawei has shrugged off the impact of political pressure from western governments over its alleged ties to the Chinese state, and claims that being added to the US government’s Entity List of organisations that American firms are banned from doing business with has so far been more of a stimulus than a hindrance.
Speaking at an event marking the supplier’s financial results for the first half of 2019, chairman Liang Hua conceded that Huawei had been under “intense pressure” from the US government, but insisted that the scope and extent of this pressure was controllable, and that the company’s core product lines had not been particularly affected.
“Our customers still believe in Huawei,” said Hua. “Our customers continue to choose Huawei, and consumers continue to buy Huawei’s products, which shows their trust in us.
“In a way, the US government’s foray against Huawei has helped us understand our objectives better. It has enhanced internal collaboration and has galvanised our people. This pressure has brought us together and reinvigorated the company.”
He added: “It has created an opportunity for our people to shine and has attracted many bright minds from around the world to join us.”
Addressing the state of Huawei’s supply chain since it was added to the Entity List, Yao Fuhai, the firm’s chief supply chain officer, said: “Since 16 May , suppliers of Huawei have been working with the US government to try to find a solution, but at the same time act in compliance with the Entity List. We have seen a gradual recovery of supplies along the way. We hope this process can be expedited. We hope more of them [suppliers] can get licences.”
Hua said that if the US government did not allow suppliers to do business with it, it had the capability to develop its own mobile operating system. Some have speculated that this may be a version of its soon-to-be-released HongMeng internet of things (IoT) operating system, something Huawei has previously denied, saying it would still prefer to use Google’s Android if possible.
In the UK, where the government’s Telecoms Supply Chain Review has failed to come to a definitive conclusion over whether Huawei should be permitted to supply components to operators building out 5G mobile networks, Huawei’s vice-president, Victor Zhang, said he did not expect the current situation to change under Boris Johnson’s new government.
“I believe the UK government will continue to make the right decisions on how to develop next-generation infrastructure using Huawei technology,” Zhang told Computer Weekly.
“It is important for the UK to have 5G, to have full-fibre, as Boris Johnson has mentioned many times. It is of fundamental importance.”
Huawei has already written to Number 10 inviting the new prime minister to meet with it, but so far has not heard back.
Huawei booked total revenues of CNY401.3bn ($53.8bn) during the first six months of this year, up 23% year-on-year. Net profit margins rose to 8.7%.
Split by business unit, Huawei’s Carrier business made sales of CNY146.5bn, its Enterprise business CNY31.6bn and its Consumer business CNY220.8bn, more than half of the total.
The firm said it had secured 50 commercial 5G contracts – 11 of them since being added to the US’s Entity List – and shipped 150,000 base stations, while its smartphone shipments were up 24% to 118 million units, driven by market-leading capabilities in areas such as battery life and on-board artificial intelligence (AI) and its partnership with Leica, which has won it plaudits for the quality of its smartphone cameras.
Nevertheless, Hua said that, objectively, it is likely that the firm will begin to see some negative impact from the ban during the second half of the year, and said his focus was on shoring up the company as much as possible to manage this impact, securing its supply chain and ensuring business continuity.
Recent developments in the Huawei affair
- Culture secretary says he cannot yet make specific decisions about Huawei’s involvement in the UK’s telecoms and mobile networks due to a lack of clarity from the US, effectively green-lighting its use.
- Science and Technology Committee tells Department for Digital, Culture, Media and Sport that there are no technical grounds for it to exclude Huawei.
- President Donald Trump promises to loosen trade restrictions on Huawei, while respecting national security concerns, but details of the changes are still unclear.
- Huawei chief security officer John Suffolk faces tough questions from parliament’s Science and Technology Select Committee over the firm’s links to the Chinese government.
- The Huawei ban will spur a faster retreat from US suppliers, as the Chinese tech company invests more in its manufacturing plants and adds non-US partners, say analysts.
- Chip design firm ARM is in communication with Huawei-owned semiconductor firm HiSilicon following US move to halt exports of US technology to Chinese tech giant.
- US Commerce Department temporarily restores Huawei’s ability to maintain its existing networks and smartphone user base.
- Google decision to exclude Huawei from the Android ecosystem follows an executive order signed by US president Donald Trump, but Huawei insists US businesses and consumers will be the real losers.
- The Trump administration’s move to effectively ban Huawei products from US networks has big implications for IT executives in charge of supply chain sourcing and security.
- Trump announces a ban on telecoms equipment from designated “adversary” states, including China.