Huawei declares it is ‘business as usual’ despite US torment

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Huawei has declared it is “business as usual” years after Washington imposed punishing restrictions that created a template for wider export controls on technology shared with Chinese companies.

The Shenzhen-based technology group said it was forecasting for three successive quarters of growth and a flat total revenue for 2022. Overall sales were expected to reach Rmb636.9bn ($91.8bn) this year, up 0.02 per cent annually.

“In 2022, we successfully pulled ourselves out of crisis mode. US restrictions are now our new normal,” said Eric Xu, Huawei’s rotating chair, in an annual new year message to employees.

Xu added that 2023 would be “the first year” for returning to “business as usual”, though Washington’s export controls on high-end technology are still in place.

Huawei has attempted to explore new markets and businesses since it was hit by the curbs. The tightened controls forced companies supplying US technology to the Chinese group to seek an additional licence from regulators, limiting Huawei’s ability to produce cutting-edge smartphones.

After being added to Washington’s trade blacklist in 2019, Huawei rapidly lost both its global and domestic market share of consumer electronics. This year, it ran out of advanced in-house designed chips, according to research company Counterpoint.

The US in October introduced new technology export curbs that more broadly restrict Chinese access to its technology, part of a wider geopolitical confrontation between the world’s superpowers.

To work around the measures, Huawei launched updated smartphone models using stockpiled chips and licensed components. It expanded the consumer business into wearables such as smart watches, which require less advanced semiconductors than smartphones. The pivot to wearables makes it easier for Huawei to source parts domestically.

Huawei has been on a quest to find alternatives to American technology, partnering with domestic companies and collaborating with local governments as Beijing works to become technologically self-sufficient.

Without mentioning the details of overcoming the advanced chip shortage, Xu said the freefall in the consumer devices business had diminished, and the company would concentrate resources on developing products next year.

Income gathered from expanding cloud services and its steady telecoms business also offset the plummeting devices sales, he added.

Another profitable source for Huawei is to levy royalties, especially in 5G-related services, to some of the world’s largest brands, including Apple and Samsung.

The company also signed more than 20 patent licences this year, covering smartphones and networking, said Alan Fan, the company’s global head of intellectual property.

Xu admitted business would still be difficult in 2023, saying that “the macro environment may be rife with uncertainty” and the company is “faced with external volatility”.

“We need to be proactive about improving the business environment and more effectively managing risks. This is the only way we can reach our business goals for 2023 and lay a solid foundation for Huawei’s continued survival and development,” said Xu.

Source: FT