Huawei CEO says US clampdown will throttle production output by $30 billion

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Huawei was present at CES Asia 2019 to showcase its latest consumer products in Shanghai, China on June 11, 2019. (Image credit: TechNode/Eugene Tang)
Huawei was present at CES Asia 2019 in Shanghai, China on June 11, 2019. (Image credit: TechNode/Eugene Tang)

Ren Zhengfei, founder and CEO of Chinese telecommunications equipment giant Huawei, said on Monday he expected the US trade blacklist will reduce production output by $30 billion over the next two years.

“We never expected that the United States would be so determined to attack us and we were unaware that the attack would be so broad,” (our translation) Ren said in a panel discussion with two Americans at the company’s Shenzhen headquarters. “But we don’t think the efforts will thwart our progress.”

The panel discussion, dubbed “A Coffee with Ren,” featured the Huawei CEO speaking about topics including network security, the US-China relationship, and global technology trends. The discussion was jointly held by American economist George Gilder and Nicholas Negroponte, the co-founder of the Massachusetts Institute of Technology (MIT) Media Lab.

Ren said in the discussion that there are still many universities working with Huawei, even in the US. “I want to invite more US politicians to visit our company. If they find out that we are being innovative, they may think we can be good friends, and we can be trusted.”

The company will invest $100 billion in research and development, as well as the reconstruction of its network structure, to make it more secure and more credible, Ren said during the discussion.

The panel offered little counterpoint to the Huawei founder’s views on the blacklisting or broader efforts from the US government to spread the ban to other countries.

Negroponte said the US President Donald Trump promised to reconsider the Huawei issue if the trade negotiation could agree on a deal. “This is obviously not about national security; it’s about something else,” he said.

The Trump administration has been campaigning for countries to ban Huawei equipment from their next-generation wireless networks, accusing the company of planting “backdoors” in their equipment to spy on other countries networks.

Ren said Huawei equipment is absolutely “backdoor-free,” and the company is willing to sign “no-backdoor” agreements with every country in the world.

“Huawei has connectivity to more than 3 billion people. Over the last 30 years, Huawei has proved that our networks are secure and have not broken,” said Ren.

After being placed on a trade blacklist by the Trump administration last month, Huawei is preparing for a drop in international smartphone shipments by 40% to 60%, according to a Bloomberg report on Monday.

Ren confirmed Huawei’s overseas smartphone sales had dropped 40%, but did not specify a time period.

Huawei revenue grew 19.5% year-on-year to RMB 721.2 billion (around $107.3 billion) in 2018, according to the company’s annual report published in March. Ren forecasted the company’s revenues in 2019 and 2020 would remain around $100 billion.

“By 2021, we will see new life, but we have a lot of changes to make, and it will take time,” he said.