UK's Huawei 5G ban could prompt other nations to follow suit
Hong Kong (CNN Business)Huawei says its sales growth is sputtering after Washington tightened restrictions against the Chinese tech company and further cut off its access to key technology.
The Shenzhen-based company reported Friday that it generated 671.3 billion yuan ($101 billion) in revenue in the first nine months of 2020. That’s an increase of 10% over the same period last year, but down from the 24% jump in revenue the company reported for the first three quarters of 2019.
The private company did not disclose detailed earnings, but it did say that its net profit margin was 8%, a decrease from 8.7% last year.
Huawei is struggling to survive after the United States further restricted access to the advanced computer chips the company needs to build its telecommunications gear and smartphones. The latest sanction bans global semiconductor companies that use American software and machinery from supplying Huawei without first obtaining a license to do so.
“As the world grapples with Covid-19, global supply chain was put under intense pressure and its production and operations saw increasing difficulties,” Huawei said in a statement Friday.
The company added that it will “do its best to find solutions, to survive … and to fulfill its obligations to customers and suppliers.”
The earnings announcement comes just as Huawei launched its latest flagship smartphone, the Mate 40. Like other recent releases, the Mate 40 does not have access to Google services thanks to restrictions that Washington slapped on Huawei last year.
Because of the latest sanctions, the company will now have trouble obtaining cutting edge chips to power high-end smartphones, which will make it hard to stay competitive with rivals such as Apple (AAPL) and Samsung (SSNLF).
Huawei overtook Samsung as the world’s top smartphone seller earlier this year, but analysts say that’s because of how the Covid-19 pandemic has affected different markets. Huawei was able to take advantage of the economic recovery in China, where the company now sells over 70% of its smartphones. Analysts expect Samsung will take the lead again as other markets reopen.
During the Mate 40 launch on Thursday, Richard Yu, chief executive of Huawei’s consumer business group, said that the company is in an “extremely difficult” situation and is “suffering” from the US government’s latest restrictions.
The company’s 5G business is also taking a hit. This week, Sweden became the latest country to ban Huawei and ZTE, another Chinese telecommunications equipment maker, from its 5G mobile networks, citing national security risks.
Earlier this year, UK officials reversed a decision to allow Huawei to participate in the build out of its 5G network, citing national security risks and the uncertainty of Huawei’s global supply chain.
Huawei has repeatedly denied that any of its products pose a national security risk.
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