Huawei Sees £22bn Smartphone Losses From Trade Ban

Huawei has said US sanctions are causing the company at least $30 billion (£22bn) in annual smartphone handset revenue losses, but that it is resigned to the situation.

“We’ve been trying to get used to the US sanctions since May 2019,” rotating chairman Eric Xu told a press briefing.

“Whether the sanctions are going to escalate or not, we are accustomed to working and living with the Entity List.”

Xu’s remarks came after US Commerce Secretary Gina Raimondo said the department could take further action against Huawei if necessary, after Republicans criticised US approval to buy chips for its car component business.

Revenue drop

The May 2019 move to put Huawei on the “Entity List” trade blacklist barred US companies from doing business with the Chinese firm without government approval.

Further measures effectively cut off Huawei’s access to cutting-edge microprocessors, dealing a blow to its smartphone handset business, which was heavily reliant on chips made with US technologies.

Huawei’s revenues in the first half of 2021 fell 29.4 percent from the same period a year ago to 320bn yuan ($49.5bn, £38bn), with consumer sales, mostly made up of smartphone sales, nearly cut in half to 135.7bn yuan from 255.8bn yuan year-on-year.

The company’s smartphone business alone generated about $50bn in 2020, Xu said.

Xu said it would take many years for those losses to be covered by revenues from new businesses, such as 5G applications in mines and airports.

“It will take a rather long time to compensate for the $30bn to $40bn losses by applying 5G technology in different industry sectors,” Xu said.

Self-sufficiency

Huawei has begun moving into new areas such as smart car components that are less reliant on advanced chips, after a “thorough appraisal” of whether it could ensure a steady supply of processors, Xu said.

“There is an old Chinese saying: ‘there will always be a way forward’,” he said.

Huawei has also invested in domestic firms developing chip-making tools and materials over the past two years, but Xu said it would take time for China to become self-sufficient in the semiconductor industry.

“Semiconductor (self-sufficiency) can be achieved, (but) I think there is still a long way to go,” he said.

He previously said Huawei’s target for 2021 was “to survive”, and told reporters his “biggest hope” is that the company will still exist in five to ten years.

Huawei chief financial officer Meng Wanzhou returned to China on Friday after nearly three years under house arrest in Canada, under a deal with US federal prosecutors.

The US Justice Department said it was continuing to prepare for legal action against the company, which it accuses of conspiring to circumvent US sanctions on Iran, something Huawei denies.