HONG KONG / SHANGHAI (Reuters) – Chinese technology giant Huawei said on Friday that the impact of US trade restrictions on business will be less than it originally feared, though the curb could push smartphone revenue lower by about $ 10 billion in year.
People visit a newly opened Huawei store in Xian, Shaanxi Province, China August 22, 2019. REUTERS / Stringer
Huawei Technologies' $ 100 billion business has been hit hard since mid-May after Washington put the world's second-largest smartphone manufacturer into a so-called Entity List that threatens to cut off access to key US components and technology.
In its first assessment of the impact of the restrictions, Huawei founder and CEO Ren Zhengfei said in June that the blacklisting would hit the company's $ 30 billion revenue, leaving it without any top-line growth for 2019.
will be a bit less than that. But you have to wait for our results in March, ”said Eric Xu, Huawei's vice president, at a news conference to introduce new artificial intelligence chips at Shenzhen's headquarters.
Huawei's consumer business group – which includes the smartphone business and is looking to develop its own operating system to prepare for the worst case of being deprived of essential Google Android apps – is doing "a lot better" this year than first feared, Xu said.
"But a (sales) reduction of more than $ 10 billion can happen," he said. Huawi Consumer Business Group reported sales of 349 billion yuan in 2018.
Spurred by promotions and patriotic purchases, Huawi's smartphone sales in China rose almost a third compared to a year ago to a record high in June quarter, helping it more than offset a decline in shipments in the global market. Huawei said last month that the consumer business group had sales of 221 billion yuan in the first half of 2019.
In a temporary relief to Huawei, Washington said this week it will extend by 90 days a reprieve allowing Huawei to buy from US companies to deliver existing customers, while adding more than 40 of Huawei's devices to their financial blacklist.
Xu said the postponement was "meaningless" to Huawei, whose staff is "fully prepared" to live and work with the ban.
Huawei, which has developed its own pieces to reduce reliance on foreign technologies, reiterated on Friday that the chips, including a new AI chipset launched on Friday called the Ascend 910, are for their own use and that it does not aim to become a chip supplier.
“We are open to discussing partnerships with AI chipset development companies, so there are different chip sets that can be used in Huawei products. So placing the chipset business as a standalone is a scenario that is not going to happen, Xu said.
Ascend 910 AI processor, a 7-nanometer chipset designed by Huawei's HiSilicon semiconductor device based on AI model training, has more computing power than any other AI chipset in the world, Xu said.
British chip designer ARM announced earlier this year that it had terminated agreements with Huawei in accordance with the ban and gave a blow to Huawei, but Xu said Huawei's eternal ownership of the ARMv8 license meant that the Ascend 910 chipset would not be affected.
Huawei said it was no longer able to collaborate with US chip designers such as Cadence Design Systems Inc ( CDNS.O ) and Synopsys ( SNPS.O ) on Due to trade restrictions, however, the company has options.
Reporting by Sijia Jiang and Brenda Goh; Writing by Miyoung Kim; Editing by Muralikumar Anantharaman