Huawei’s CEO and founder Ren Zhengfei has admitted that the US ban will have a more severe impact on the company’s fortunes than it was initially expected. The Huawei founder also admitted he was “surprised at the extent to which Washington has attacked” his company.
Zhengfei made the remarks in a conversation at the company’s Shenzhen headquarters during a discussion with two American tech leaders Nicholas Negroponte and George Gilder. Negroponte is the co-founder of the MIT Media Lab, while Gilder is an economist.
“We didn’t expect the US would so resolutely attack Huawei. We didn’t expect the US would hit our supply chain in such a wide way — not only blocking the component supplies, but also our participation in international organisations,” Ren was quoted as saying in the panel by Bloomberg.
Zhengfei in the discussion admitted that the company will have to reduce its capacity. “I think we will reduce our capacity, our revenue will be down by about $30 billion compared to forecasts,” he was quoted as saying. He predicted that the sale revenue for the next two years will be around $100 billion. The company’s revenue in 2018 was $107 billion and it had seen a growth of 19.5 per cent last year, but all of this will now be impacted due to the US ban.
Huawei’s smartphones ambitions will also be crippled as sales are expected to drop 40% to 60% decline in international markets for the company, according to a Bloomberg report. For Huawei, which had become the number two smartphone vendor in the world with close to 50 per cent sales coming outside of China, the US ban puts the future of its phones at risk.
Companies like ARM Holdings, Qualcomm, Google, Intel, Microsoft have also been forced to cut ties with Huawei. The result is that Android could be missing on future Huawei phones, though the company is developing its OS called HongMeng, which could be released by fall of 2019.
However, Zhengfai also said that the company would not crack despite the US pressure, adding that they were still keen to work with US companies.
“We’re not afraid to work with US components, we’re not afraid to use US elements,” he was quoted as saying in the discussion by Wired. He had previously said he would not support a retaliatory ban on Apple by China, and would be the first to protest if this were to happy.
The Huawei founder also denied that the company was planting backdoors in its products. The US government has called Huawei a security threat and banned all companies from trading with the firm. But Zhenghai also said he was confident that the company will be “reborn by 2021.”