Huawei vows to ‘shake off’ pressure as network business takes a hit

Huawei faces pushback in some Western markets over fears Beijing could gain access to critical infrastructure. (File/AFP)
Updated 29 March 2019

Huawei vows to ‘shake off’ pressure as network business takes a hit

  • Huawei is the leading manufacturer of equipment for next-generation 5G mobile networks that will bring near-instantaneous connectivity for smartphones
  • Huawei has vowed to never allow security “backdoors” in its products which could be used for espionage or sabotage

SHENZHEN, China: Chinese telecom giant Huawei vowed on Friday to “shake off outside distractions” as it announced that its telecom infrastructure business contracted slightly in 2018 amid a global US campaign to blacklist the company over espionage fears.
Huawei said net profit rose to 59.3 billion yuan ($8.8 billion) last year, up 25 percent.
But its carrier business, which supplies telecom infrastructure to much of the world, posted a rare decline, suggesting that the US pressure could be having an impact.
The company’s carrier business was down 1.3 percent on the year, compared to growth of 2.5 percent in 2017 and annual increases typically in excess of 20 percent in years past.
Huawei is the leading manufacturer of equipment for next-generation 5G mobile networks that will bring near-instantaneous connectivity for smartphones, but faces pushback in some Western markets over fears Beijing could gain access to critical infrastructure.
“Security concerns are having an impact on Huawei, as more and more countries place restrictions on the firm’s network gear,” said Brock Silvers, managing director of Kaiyuan Capital.
“Moreover, the US-led global movement has only just begun and is unlikely to quickly recede even in the event of a trade war agreement.”
Huawei’s annual report, released at corporate headquarters in the southern city of Shenzhen, did not detail what caused the carrier business decline or make clear reference to the global pressure.
But the company vowed to press ahead.
“Moving forward, we will do everything we can to shake off outside distractions, improve management and make progress toward our strategic goals,” rotating chairman Guo Ping said.
Huawei also is grappling with the December arrest by Canada of chief financial officer Meng Wanzhou, daughter of company founder Ren Zhengfei, on US charges that she and Huawei circumvented sanctions against Iran.
Two affiliates also were charged this year with stealing trade secrets from telecom group T-Mobile in a separate case.
Guo reiterated Huawei’s insistence that it poses no security risk and sought to play up the company’s trustworthiness.
“No government or any third party holds shares in our company or intervenes in our operations and decision-making,” he said.
He also hinted that Huawei’s market dominance made it a crucial player in the global 5G rollout that could not be sidelined.
“We are confident that the companies that choose to work with Huawei will be the most competitive in the 5G era,” he said.
“Countries that choose to work with Huawei will gain an advantage for the next wave of growth in the digital economy.”
He said Huawei signed more than 30 commercial contracts for 5G in 2018 and shipped more than 40,000 5G base stations to markets around the world.
Overall revenue grew 19.5 percent while sales in Huawei’s consumer business, consisting largely of smartphones, surged 45 percent.
Huawei hit back at Washington earlier this month by suing the United States over a law barring US government agencies from engaging with Huawei or with third parties that use the company’s products, which has crippled Huawei in that lucrative market.
Washington has long considered Huawei a potential threat due to the background of founder Ren, a former Chinese army engineer.
Those concerns have escalated as Huawei has risen to become the world leader in telecom networking equipment and one of the top smartphone manufacturers alongside Samsung and Apple.
Huawei has vowed to never allow security “backdoors” in its products which could be used for espionage or sabotage, and insists Washington has never produced evidence substantiating claims of security risks.
Huawei’s annual report mentioned the US legal troubles only in vague terms under the heading “Contingent Liabilities.”


Huawei given 90 days to buy from US suppliers

Trader Tommy Kalikas works on the floor of the New York Stock Exchange, Monday, Aug. 19, 2019. (AP)
Updated 20 August 2019

Huawei given 90 days to buy from US suppliers

  • Shortly after blacklisting the company in May, the Commerce Department initially allowed Huawei to purchase some American-made goods in a move aimed at minimizing disruption for its customers

WASHINGTON: US Commerce Secretary Wilbur Ross said Monday the US government will extend a reprieve given to Huawei Technologies that permits the Chinese firm to buy supplies from US companies so that it can service existing customers, even as nearly 50 of its units were being added to a US economic blacklist.
The “temporary general license,” due to expire on Monday, will be extended for Huawei for 90 days, he told Fox Business Network Monday, confirming an expected decision first reported Friday by Reuters. He also said he was adding 46 Huawei affiliates to the Entity List, raising the total number to more than 100 Huawei entities that are covered by the restrictions.
Ross said the extension was to aid US customers, many of which operate networks in rural America.
“We’re giving them a little more time to wean themselves off,” Ross said.
Shortly after blacklisting the company in May, the Commerce Department initially allowed Huawei to purchase some American-made goods in a move aimed at minimizing disruption for its customers.
The extension, through Nov. 19, renews an agreement continuing the Chinese company’s ability to maintain existing telecommunications networks and provide software updates to Huawei handsets.
Asked what will happen in November to US companies, Ross said: “Everybody has had plenty of notice of it, there have been plenty of discussions with the president.”
When the Commerce Department blocked Huawei from buying US goods earlier this year, it was seen as a major escalation in the Sino-US trade war.
The US government blacklisted Huawei, alleging the Chinese company is involved in activities contrary to national security or foreign policy interests.

BACKGROUND

The US blacklisted Huawei, alleging the Chinese company was involved in activities contrary to national security or foreign policy interests.

As an example, the blacklisting order cited a pending federal criminal case concerning allegations Huawei violated US sanctions against Iran. Huawei has pleaded not guilty in the case.

The order noted that the indictment also accused Huawei of “deceptive and obstructive acts.”
At the same time the US says Huawei’s smartphones and network equipment could be used by China to spy on Americans, allegations the company has repeatedly denied.
Huawei, the world’s largest telecommunications equipment maker, is still prohibited from buying American parts and components to manufacture new products without additional special licenses.
Many Huawei suppliers have requested the special licenses to sell to the firm. Ross told reporters late last month he had received more than 50 applications, and that he expected to receive more. He said on Monday that there were no “specific licenses being granted for anything.”