Wednesday, 01 April 2020 06:07

Huawei reports smaller profit, warns China may hit back at US curbs Featured

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Huawei reports smaller profit, warns China may hit back at US curbs Pixabay

Chinese telecommunications equipment vendor Huawei Technologies has reported revenue of 858.8 billion Chinese yuan (US$121 billion) for the full-year 2019, a rise of 19.1% year-on-year, with profit of 62.7 billion Chinese yuan (US$8.8 billion). This was its lowest annual profit growth in three years, announced as the company warned that China would hit back against US measures that have got in the way of its progress.

The company said in a statement it invested 15.3% of revenue back into research and development. The company's carrier business recorded revenue of 296.7 billion Chinese yuan, up just 3.8% year-on-year.

Last year, Huawei's woes multiplied after it was placed on a blacklist by the US Government, making it mandatory for the company to obtain permission if it wanted to buy any product which has more than 25% American content. The company's presence on the list was meant to cut it off from doing business with chip makers like Micron Technology, Intel and Qualcomm.

However, these companies have used loopholes in the regulations to continue to sell to Huawei from overseas locations.

A few days back, restrictions were ratcheted up, with Washington deciding to take aim at Huawei's semiconductor purchases from Taiwan Semiconductor Manufacturing Company which it uses in its HiSilicon chip-designing unit.

This appears to have been effected by altering the Foreign Direct Product Rule which places some goods made abroad under US regulations if they are based on American technology or software.

Chairman Eric Xu warned during a presentation of the results that the Chinese Government would not stand by and watch Huawei being put under pressure by the American Government.

“The Chinese government will not just stand by and watch Huawei be slaughtered on the chopping board,” he was quoted as saying by Reuters.

“Why wouldn’t the Chinese Government ban the use of 5G chips or 5G chip-powered base stations, smartphones and other smart devices provided by American companies, for cyber security reasons?”

Huawei's statement said the company had shipped 240 million smartphones during the year, with its consumer business recording revenue of 467.3 billion Chinese yuan, an increase of 34% year-on-year.

"The external environment will only get more complicated going forward," Xu cautioned. "We need to keep enhancing the competitiveness of our products and services, promoting open innovation, and creating greater value for our customers and society at large.

"This is the only way we can seize the historic opportunities presented by the digital and intelligent transformation of industries, and maintain robust growth in the long run."

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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