Huawei’s global business hurt by Trump sanctions

Chinese tech giant Huawei has admitted that US sanctions have hit the smartphone business after a decline in earnings in overseas markets on March 31st.

Huawei was blacklisted for export by then-US President Donald Trump in 2019, after which access to key technologies of US origin was banned, affecting the ability of external vendors to design their own chips and source components. Gave.

The ban put Huawei’s mobile phone business under great pressure, and in November 2020 the company sold its budget smartphone unit to a consortium of distributors and dealers to keep it alive.

However, growth in other parts of the business meant that Huawei recorded a net profit of 6.4% in 2020, an increase of 3.2% compared to 5.6% growth in the previous year.

“It has caused a great deal of damage to us,” said Ken Fu, chairman of Huawei’s rotation, about the impact of US sanctions.

“It wasn’t easy to live in 2020, as growth slowed,” Hu said at a press conference at Huawei headquarters in southern Shenzhen on Wednesday.

Huawei’s growth was driven by the domestic market, with sales in China increasing 15.4% to 584.9 billion yuan.

The business declined everywhere else, with sales in Europe, the Middle East and Africa down 12.2% to 180.8 billion yuan. Revenues were down 8.7% to 64.4 billion yuan in other parts of Asia and down 24.5% to 39.6 billion yuan in the Americas.

The Trump administration has shown a strong attitude towards Huawei and other Chinese tech companies, and the Chinese Communist Party (CCP) could use their equipment to spy on Americans and disrupt telecommunications networks. Said there is. Chinese law requires domestic companies to work with CCP security agencies when required.

Huawei has consistently denied a relationship with CCP, stating that CCP is almost entirely an employee-owned private sector. The trade union organization owns 99.1% of the company and serves as a platform for more than 121,000 employees who own shares. However, a 2019 survey concludes that, unlike regular stock, employees are not given actual ownership.

Last year also banned Huawei, the world’s largest telecommunications equipment maker, from the rollout of 5G networks as the Trump administration’s efforts warn the country about security threats posed by China-based tech companies. Countries came one after another.

In December, the Federal Communications Commission finalized a rule requiring carriers using equipment from Huawei or another Chinese telecommunications company, ZTE, to “rip and replace” their equipment. did. It created a redemption program for that effort, and in December US lawmakers approved $ 1.9 billion to fund the program.

Last month, regulators designated five Chinese companies, Huawei Technologies Co, ZTE Corp, Hytera Communications Corp, Hangzhou Hikvision Digital Technology Co and Dahua Technology Co, as threatening national security.

Reuters contributed to this report.