U.S. Restrictions Push Huawei’s Revenue Down by Nearly a Third

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Chinese tech company says efforts to reshape its business are on track

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Huawei disclosed a year-end revenue drop to employees from its chairman Guo Ping. In the letter, Mr Guo said the company’s efforts to reshape its business after US sanctions were on track, but Huawei would face another challenging year.

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The results were in line with Huawei’s forecasts, Mr Guo said. Huawei executives had earlier warned of a possible drop in revenue for the year.

After years of booming, Huawei was battered this year by far-reaching US export controls that barred the company from acquiring critical chips and other components. Its smartphone business, which is the world’s largest for several months in 2020 before sales, has been hit hardest, but dried up this year due to challenges in obtaining chips.

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“Huawei’s smartphone business, which made up about half of the company’s revenue in 2020, is declining,” said Dan Wang, technology analyst at Gavecall Dragomics. “Even with the heroic effort, Huawei will not be able to quickly maneuver into new business lines to stop this bleeding.”

Huawei’s 5G telecommunications business was blocked in several Western countries following pressure from the US, which considers Huawei equipment vulnerable to espionage or interference by the Chinese government. Huawei has denied that its equipment is a threat and says it is owned by employees and operates independently of the government.

Mr Guo said Huawei’s telecom carrier business was stable in 2021, while its enterprise business, the company’s smallest business unit, experienced solid growth. The company’s consumer business continues to expand into new areas, he added.

Among them, he said, were a variety of new consumer devices centered around the company’s self-developed operating system, called HarmonyOS. He also said that the company is building a software ecosystem for digital infrastructure called EulerOS.

Mr. Guo said the company is committed to attracting foreign talent, adding that it is offering top-notch compensation for those who join.

Huawei is focusing on new areas that are less dependent on foreign supply chains and high-end chips, including software, wearables and automobiles. Still, officials have said that smartphone sales in these new business segments are unlikely to decline anytime soon.

This year also saw the release of Huawei’s chief financial officer, Meng Wanzhou, who had been in Canada for nearly three years after being sought by the US on bank fraud charges related to the company’s alleged business in Iran. Ms Meng returned to China in September after reaching a deferred prosecution agreement with the US in an apparent prisoner swap in which China released two imprisoned Canadians.

Write [email protected] . on Dan Strumpf

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