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Huawei is planning comprehensive arrangements in the United States




Huawei Technologies Co. plans extensive layoffs at its US operations, according to people who are familiar with the case, as the Chinese technology giant continues to struggle with its US blacklisting.

The dismissals are expected to affect workers in Huawei's US research and development company Futurewei Technologies, according to these people. The unit employs about 850 people in research laboratories in the United States, including Texas, California and Washington.

Huawei refused to comment. The exact number of redundancies could not be determined, but one of the people said they were expected to be in hundreds. Some of Huawei's Chinese employees in the United States had the opportunity to come home and stay with the company, another person said.

Futurewei employees have met restrictions that communicate with colleagues in Huawei's home office in China after May 1[ads1]6 to put Huawei on its so-called entity list, which blocked companies from delivering US-sourced technology to Huawei without a license, according to those people.

Several employees have already been notified of dismissal, while several planned cuts may be

Blacklisting has limited Huawei's ability to purchase key US components and software for its products, including smartphones and mobile base stations popular outside the United States. Huawei bought US $ 11 billion years.

A statement for Huawei seemed to be in sight after President Trump told the Group 20 summit in Osaka, Japan, last month that he would allow some technical exports to the company to resume. Beijing sees a relief of restrictions on Huawei as a precondition for any trade deal with Washington.

The American blacking of Huawei's cut of American businesses from a large client. WSJ's Dan Strumpf looks at the American technology that has driven the Chinese company's smartphones. Photo Composite: Sharon Shi

On Tuesday, Minister of Commerce Wilbur Ross stated that the United States would begin to grant export licenses to Huawei vendors whose sales to the Chinese company do not endanger national security. Meanwhile, Secretary of State Steven Mnuchin has urged US vendors to apply for licenses.

The United States says that Huawei equipment poses a security risk because the giant telecommunications company has no choice but to meet the requirements of China's authoritarian government to perform cyber espionage on its behalf. Huawei says it is an independent company without government ties and has challenged US officials to provide evidence of espionage.

Huawei is the world's leading manufacturer of telecommunications equipment and number 2 smartphones provider

apple
Inc.

and just behind

Samsung Electronics

However, despite its dominant position in many markets, the company is effectively blocked from selling the equipment to major US carriers following a 2012 convention report that said it could be a security risk. Huawei has denied this.

In the United States, Huaweis handles approx. 1500 employees mainly sell equipment to rural wireless operators across the country, while others are researching for a number of technologies at Futurewei. Huawei employs over 180,000 people worldwide.

However, the May 16 Department of Commerce notes the complexity of Futureweis's ability to continue working with its home offices in China, because Futurewe's R&D efforts may represent US-sourced technology during Huawei's business listing, These People said.

Under the notation rules, "unauthorized transfer of any technology of any kind by anyone from the United States to Huawei is prohibited," said Kevin Wolf, a partner of law firm Akin Gump, a trade department official during the Obama administration.

In addition to the US Black List, Huawei also confesses a few allegations by the US on charges of intangible property theft and breaches of US sanctions against Iran. Meanwhile, US officials have lobbyed allies around the world to block Huawei from participating in their 5G network rollouts. This effort has had mixed success.

Analysts say the business listing represents the most serious threat to Huawei given its reliance on US chips and other technology. Huawei founder Ren Zhengfei said last month that the measure would cost Huawei $ 30 billion in lost revenue this year and next. And the company's international smartphone sales fell 40% a month after blacklisting was announced, but the decline has since moderated. Huawei had more than $ 100 billion in revenue last year, according to its annual report.

On Friday, Huawei chairman Howard Liang said at a press conference at the company's headquarters in Shenzhen that the company did not yet have any benefit from Mr. Trumps promising to roll back export restrictions and said that the Chinese firm would be removed from the device list altogether.

Huawei smartphones are running on Google's Android operating system and, among other things, restricts the construction list from Google licensing the software on future Huawei phone models. While Huawei is working on its own replacement operating system, known as Hongmeng, Ren said in a recent interview with a French newspaper that it was originally designed for telecommunications networks and said "we don't have a clear plan yet" to develop a software system around the operating system.

Write to Dan Strumpf at daniel.strumpf@wsj.com

Copyright © 2019 Dow Jones & Company, Inc. All rights reserved. Dc2bbcbcbcbbcbcbcbbcbbbcbc0b08



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