Huawei announces swinging cuts to production as sales plummet 40 per cent

Sheri Evans
June 19, 2019

Hundreds of companies, trade groups and individuals have written the USA trade representative to protest the administration's plan to extend tariffs of up to 25 percent on the $300 billion worth of Chinese sales to the United States that haven't already been hit by import taxes. While he did not give the time period, a spokesman clarified the CEO was referring to the past month. The firm had earlier predicted for a revenue of between US$125 billion and US$130 billion for this year.

Ren added, however, that sales growth in China's domestic market remained "very fast".

Ren, 74, said Huawei planned to cut production by $30 billion over the next two years to ride out the storm. As a comparison, the manufacturer shipped 206 million units past year, out of which about 50% were meant to be sold overseas.

More broadly, USA businesses are expressing alarm at the Trump administration's aggressive policies toward China.

This includes alleged criminal activities - among them, accusations of trade secret theft and wire fraud - in the charges filed by the U.S. Department of Justice against Huawei in January. Today that all changed, with Huawei cutting revenue projections based on the hit it expects from the ban.

Huawei has emerged as a key bone of contention in the wider China-US trade war that has seen tit-for-tat tariffs imposed on hundreds of billions of dollars worth of goods. Critics say such theft helped Huawei vault into the upper echelons of technology - but Ren has laughed off that premise.

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President Donald Trump has said US complaints against Huawei could be resolved within the framework of any trade deal.

Last month it also added Huawei to an "entity list" of companies barred from receiving US-made components without permission from Washington, though the company was granted a 90-day reprieve for now.

Huawei strongly denies any links to China's government and says the United States has never provided proof of its accusations. Huawei has been on shaky grounds ever since the USA government issued an order banning Huawei from doing business with the US-based companies.

Lyu Tingjie, a telecom professor at Beijing University of Posts and Telecommunications, said any harm to Huawei will have broader ripple effects across the global tech arena and beyond due to the company's huge size and its technological prowess in 5G.

Ren has struck a defiant tone in the face of USA sanctions that threaten his company's very survival.

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