With US restrictions hurting its business and threatening its supply chain and tech inventory, Huawei says it is in survival mode
Huawei executives have warned it is in survival mode as continuous “attacks” from the United States threaten its access to key technologies.
“Huawei is in a difficult situation these days,” the company’s rotating chief executive Guo Ping was quoted by CNN as saying at a conference on Wednesday.
And he pointed the finger of blame firmly at the United States and the relentless campaign waged against by US President Donald Trump.
“Nonstop aggression from the US government has put us under significant pressure,” Ping was quoted as saying. “Right now, survival is the goal.”
The United States has dramatically ramped up the pressure on the Chinese networking giant in recent months.
In August the United States further “restricted access by Huawei Technologies (Huawei) and its non-US affiliates on the Entity List to items produced domestically and abroad from US technology and software,” the US Commerce department announced.
Instead, a special licence is now required, which closes the loopholes in the sanctions that the US implemented in May this year, which allowed Huawei to access the tech via third parties.
Essentially, the new restrictions have been expanded to require third party companies to seek US permission – even if they are selling an ‘off the shelf’ general purpose designed chip.
Huawei of course has been on a US ‘entity blacklist’ since May 2019, but until recently it was still able to acquire American tech because the US Commerce Department keep extending its implementation of the entity listing and was able to buy semiconductors from companies outside the US, such as Taiwan’s TSMC.
But that changed in May this year when Huawei was barred from purchasing chips directly from none US companies – a move that Huawei said at the time threatened its survival.
But the US Commerce Department said the Chinese firm had continued to build chips by “commissioning their production in overseas foundries using US equipment”.
The measures by the United States implemented in both May and August are making it increasingly difficult for Huawei to acquire chips (even if they are not designed specifically for Huawei), which in turn is threatening Huawei’s position as the leading smartphone supplier in the world.
And it is clear that Huawei feels this latest measures are a very serious risk to the company.
“The United States has been continuously attacking us and [the latest restriction] has posed great challenges to our operations,” Guo was quoted as telling reporters.
Analysts have estimated that Huawei has stockpiled enough semiconductors to last the company through at least the end of the year.
But when asked how long supplies will last at a press conference on Wednesday, Guo was quoted by CNN as saying “we’re still evaluating more details.”
He added that Huawei buys hundreds of millions of chipsets for its smartphone business every year, and that the company received its last shipment of chips in mid-September, when the US restrictions announced in May went into effect.
It is reported that Qualcomm and SK Hynix have applied for licences to sell to Huawei.
Intel earlier this week was granted a license from US authorities to continue supplying Huawei, but did not specify what products it could sell.
But Intel is a known supplier of processors for Huawei laptops.
“The US has modified their sanctions for the third time and that has indeed brought great challenges to our production and operations,” Guo was quoted by Reuters as telling reporters in Shanghai.
“We hope the US government can reconsider its policy and if the US government allows it we are still willing to buy products from US companies,” Guo reportedly added.