Huawei Seeing Impact From Sanctions in Q1 2021

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After seeing harsh restrictions from the United States, Huawei is now reporting a 16.5% year-on-year reduction in revenue. One of the key reasons for this was the Chinese technological giant’s dumping of its Honor brand back in November 2020. Further complicating things was a global economic downturn and supply chain issues both due to the international outbreak of COVID-19, and though Huawei’s Rotating Chairman, Eric Xu, is aware of the challenges the company faces, he is confident that Huawei will press on. 

“2021 will be another challenging year for us, but it’s also the year that our future development strategy will begin to take shape,” said Xu. “No matter what challenges come our way, we will continue to maintain our business resilience. Not just to survive, but do so sustainably. As always, we will remain focused on the needs of our customers and keep delivering practical business value,” he continued.

Part of this optimistic approach comes from Huawei’s progress in research and development (R&D) which is now improving many of the products and services the company can offer. Combined with the company’s investment in its software sector is providing an incremental increase in software and services to grow revenues in the future. “As always, we remain committed to technological innovation and investing heavily in R&D as we work to address supply continuity challenges caused by restrictions in the market,” Xu said.

Beginning in May 2019, the United States added Huawei to its Entity List which meant that the company could not purchase parts from U.S. companies without a license from the government granting permission. The backlash came after security concerns were raised into question about Huawei’s involvement with the Chinese government and the components being used to set up 5G across the country. Many argued that even if Huawei were to play by the rules, due to the laws in China, they may be forced into delivering intel to the Chinese government posing a threat to the United States.

The threat of spying on the U.S. government and its citizens was one issue that both parties were able to find common ground on. Though the Trump administration was the first to implement such sanctions against Huawei and other Chinese-based tech companies, now that President Biden has taken over the reins, he is showing no signs of reversing course. This is something Huawei is aware of with Xu speaking on this topic during the Huawei Global Analyst Summit 2021, “We believe that we will need to continue working and surviving while on the Entity List for a long time. We cannot develop our strategy based on wrong assumptions or unrealistic hopes. Our overall strategy and specific initiatives are all developed to ensure that we could survive and develop while remaining on the Entity List for a long time.”

Source: RCR Wireless