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Huawei founder expects tough times ahead

2019-06-17 HKT 16:24
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  • Huawei founder Ren Zhengfei says production will drop amid the China-US trade war. File photo: AP
    Huawei founder Ren Zhengfei says production will drop amid the China-US trade war. File photo: AP
The founder of Huawei said on Monday that the embattled Chinese telecom giant will slash production over the next two years as it grapples with a US push to isolate the company internationally.

"In the coming two years, the company will cut production by US$30 billion," Ren Zhengfei said during a panel discussion at corporate headquarters in Shenzhen.

Huawei's overseas cellphone sales will drop by 40 percent, Ren said, confirming a Bloomberg report published on Sunday. But the Chinese market is growing rapidly, and Huawei will not allow restrictive measures to curb its research and development, he added.

He gave no further details on the sales plunge but a Huawei spokeswoman later clarified that he was referring to a 40 percent fall from May to June in the wake of the US blacklist threat.

Ren also said the company expected revenues of about US$100 billion annually for the next two years, compared with US$105 billion in 2018. In February, he said the firm was targeting US$125 billion in 2019.

But Ren, who compared Huawei to damaged aircraft, added that he expected the company to get back on its previous trajectory by 2021.

"In 2021, we will regain our vitality and [continue to] provide services to human society," he said.

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.

President Donald Trump's administration has essentially banned Huawei from the huge US market and barred American tech companies from supplying the Chinese company with vital components without permission from Washington.

Washington fears that systems built by Huawei, the world's leader in telecom equipment and the number two smartphone producer, could be used by Beijing for espionage.

The Trump administration also is pressuring other countries to ban Huawei equipment from their networks, particularly in the coming roll-out of super-fast 5G networks, a project in which Huawei had been expected to play a leading role.

The US campaign has already spurred a number of major technology companies, including major semi-conductor suppliers and brands such as Facebook and Google, to suspend cooperation with Huawei.

Ren said there are no backdoors in its equipment that anyone could access, and that Huawei is willing to enter into a no-backdoor agreement with any nation that wants one.

He said it never occurred to Huawei that the American government would be so determined to take such a wide range of what he called extreme measures against the company.

"I think both sides will suffer," he said. "No one will win." (AP/AFP)
Last updated: 2019-6-17 HKT 17:39