Huawei, the crown gem of Chinese tech industry, is shaken by a financial double issued by US sanctions against chips and a campaign to reduce international markets.
But with Huawei expanding rapidly into new markets and the Chinese government investing heavily to gain technological independence from the West, this leverage may not last long.
the The US government has targeted Huawei on alleged espionage and state ties, claiming that the company 5G wireless equipment poses a security risk. The rise of Chinese companies is seen by many in the West to be linked to the power of the Chinese government and its brand of techno-authoritarianism.
Huawei last financial report, released Wednesday, shows the financial cost of the US campaign. Revenue growth slowed to 3.8% last year from 19% in 2019; international sales fell sharply, especially in Europe.
Sales of the company’s smartphones have taken off. After ranking second in global shipments behind Samsung in 2019, Huawei was not among the top five smartphone makers at the end of 2020, according to the research firm. Canalys.
“The United States has been successful in controlling Huawei’s overall growth, but it is unlikely to crush it as a global technology powerhouse,” says Peter Cowhey, Dean of the School of Global Policy & Strategy at UC San Diego, and former US government official.
The United States has banned Huawei network equipment from domestic 5G networks and has persuaded other countries, including the United Kingdom, Canada and Australia, to impose similar restrictions. Last year, the United States also imposed export controls to cut off the supply of high-end chips to Huawei and advanced chip-making equipment to China, crippling Huawei’s ability to manufacture high-end smartphones.
“The supply restrictions for our smartphone business have caused us a great impact, and we have not been able to see a clear picture of the supply for our smartphones,” said Ken Hu, vice president of Huawei, at a press conference held at the company’s headquarters in Shenzhen on Wednesday. “We think this is a very unfair situation for Huawei, and it has caused us great harm.”
Microchips are China’s Achilles heel because they lack the domestic capacity to create the nanoscale functionality of the most advanced and powerful components. Chinese chip makers such as Minimum wage produce chips for low-end products, including Internet of Things devices.