Monday 17 June 2019 8:51 am

Huawei expects revenue to drop by billions amid US ban


Reporter at City A.M. covering banking, markets and insurance

Reporter at City A.M. covering banking, markets and insurance

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Huawei international smartphones sales dropped 40 per cent last month as the Chinese tech firm felt the immediate impact of the US ban.

Chief executive said sales were expected to drop to $100bn (£79.5bn) this year and in 2020 and that production would be reduced by $30bn in anticipation of the decline.

The revised revenue would fall short of 2019 targets of $125bn and be drop from the $104.2bn it reported in 2018.

Speaking at the company’s headquarters in Shenzhen, Ren said: “Over the next two years, the company will reduce production.


“We estimate we’ll reduce production by $30bn.”

But Ren, who said “no one will win” in the escalating battle between the company and the US government, expected a revival in 2021.

Read more: UK mobile operators ‘must be cautious’ over Huawei

It comes after US President Donald Trump signed an executive order effectively blocking American companies from working with telecoms firm Huawei.

The company has found itself at the centre of a trade dispute between the US and China and faces allegations its equipment could be used by Beijing for spying, which it has always denied.

After the sharp fall in international smartphone sales, Huawei could even pull its new Honor 20 phone, Bloomberg reported.

Executives had been bracing themselves for a 40 to 60 per cent drop in international smartphones shipment due to the effect of the Trump blacklisting and uncertainty regarding Huawei in other western countries, according to the report.


Ren said the company would not cut research and development spending despite the impact on its finances.

“It took barely a month from the blacklisting of Huawei by the US for the Chinese mobile phone maker to start revising down its growth forecasts for this year and next as it watches its overseas sales of mobile phones plummet,” City Index analyst Fiona Cincotta said.

“The frictions between the US and China seem to be far from resolved and while that is simmering in the background Huawei has little chance of turning around the sentiment in the West towards its products,” she added.

Last week China’s ambassador to the UK warned a ban on Huawei would send a “very bad  signal” and could harm trade tensions between the two countries.

Read more: Chinese ambassador warns UK ban on Huawei would send ‘very bad signal’

Liu Xiaoming told BBC’s Newsnight that Chinese companies could be put off doing business in the UK if Huawei is blocked from 5G networks.

The US ban has had a knock-on effect on British suppliers to Huawei, but the government is yet to issue a verdict on whether the Chinese company will be allowed to participate in the UK’s 5G network.

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