Huawei Expects US Restrictions To Slash Smartphone Revenue By $10B

Huawei said that revenue loss from U.S. trade restrictions will hit it for about $10 billion, which is $20 billion less than initially feared, according to a report by Reuters.

In May, Washington placed Huawei on an Entity List that cut it off from U.S. technology and essential components over fears of spying from the company’s 5G technology and infrastructure. Huawei has vehemently denied those claims.

The original fear after the announcement of the restrictions was that Huawei wasn’t going to have any top line growth this year.

“It seems it is going to be a little less than that. But you have to wait till our results in March,” said Eric Xu, Huawei’s deputy chairman.

Xu was speaking at a conference about the company’s new AI chips.

Huawei has been making adjustments after the announcement, and it’s preparing for a “worst case” scenario, where it has to develop its own operating system in case it can’t use Android, which is made by Google.

The company is doing better than expected though, Xu said.

“But a (sales) reduction of more than $10 billion could happen,” he said.

The company’s consumer business group had revenue of 349 billion yuan last year.

Huawei has seen a jump in sales from not only promotions, but patriotic purchases in the country — and it’s jumped almost a third above a year ago this quarter, to a record high. The surge helped to offset the slump that Huawei is experiencing around the globe.

Washington also offered Huawei a sort of reprieve this week, saying that it’s going to let Huawei buy from U.S. companies as needed to supply its existing customers. Even while offering this pseudo olive branch, the U.S. government added 40 of Huawei’s products to its own economic blacklist.

In response, Huawei said that the so-called reprieve was “meaningless” and that its workers were “fully prepared” to not only work with but live with the ban.