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Huawei Said the US Would Cut Smartphone Revenue by More Than $10 Billion

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Guidance: China's technology giant Huawei said on Friday that the impact of U.S. trade restrictions on its business would be lower than its initial fears, although the restrictions could reduce the revenue of its smartphone sector by about $10 billion a year.

Since Washington listed the world’s second-largest smartphone maker as a so-called entity, Huawei Technologies Inc.’s $100 billion business has been severely hit, possibly cutting off access to essential components and technologies in the United States.

Ren Zhengfei, Huawei’s founder and CEO, first assessed the impact of these restrictions in June, saying that the blacklist would increase the company’s revenue by $30 billion, leaving it without any first-line growth in 2019.

“It looks like it’s going to be a little less than that. But you have to wait until March for our results, “Eric Xu, Vice President of Huawei, said at a press conference that he would launch a new AI chip at his Shenzhen headquarters.

Xu Hua’s consumer business groups, including smartphone businesses, are competing to develop their own operating systems to prepare for the worst-case scenario – stripping out the necessary Google Android applications – and this year’s performance is much better than initially feared, Xu said.

“But it could be reduced by more than $10 billion,” he said. Huawei Consumer Business Group earned 349 billion yuan in 2018.

Stimulated by promotions and patriotic purchases, Huawei’s smartphone sales in China surged by nearly a third compared with the same period last year, reaching a record quarterly high in June, helping to offset the decline in global market shipments. Huawei said last month that its consumer business group had revenue of 221 billion yuan in the first half of 2019.

Washington temporarily eased its support for Huawei this week, saying it would postpone it for 90 days, allow Huawei to buy from American companies to supply existing customers, and add more than 40 units to its economic blacklist.

Xu said probation is meaningless for Huawei, whose employees are “fully prepared” to live and work with the ban.

Huawei has been developing its own chips to reduce dependence on foreign technology. On Friday, Huawei reiterated that its chips, including its new AI chipset called Ascend 910, launched on Friday, are for its own use only and do not intend to become a chip supplier.

“We are willing to discuss partnerships with AI Chipset Development Company, so we can use various chipsets in Huawei products. Therefore, positioning our chipset business as an independent business will not happen, “Xu said. Ascend 910 AI processor is a 7-nanometer chipset designed by Huawei Semiconductor HiSilicon. It trains AI model based on ARM architecture and has more computing power than any other AI chipset in the world.

British chip designer ARM announced earlier this year that it would stop striking a ban with Huawei, but Xu said Huawei’s permanent ownership of the ARMv8 license meant that Ascend 910 chipset would not be affected.

Huawei said that because of trade restrictions, it could no longer work with American chip designers such as Cause Design Systems Inc and Synopsys, but the company had alternatives.

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