Founder confident that Huawei will rebound
June 25, 2019 Category China News Round-up, Weekly
Attacks from the United States will not stop Huawei from moving forward, Founder and CEO Ren Zhengfei said. Ren estimated that the company’s revenues could drop to around USD100 billion this year and the next, but he expected a revival in 2021. He made the remarks during a dialogue with U.S. futurist George Gilder and Nicholas Negroponte, co-founder of the Massachusetts Institute of Technology’s Media Lab, at Huawei’s headquarters in Shenzhen. Huawei will invest USD100 billion in the next five years to make network infrastructure more efficient and reliable, Ren said. Despite the financial blows, Ren said there was no plan to reduce research spending and he promised to make more contributions to theoretical science in the future.
He said Huawei will neither split nor sell its mainstream businesses, and it has no plans for a mass layoff. In answering a question about Huawei’s plan to sell its submarine cable business unit, Ren said the company had long wanted to dispose of this business. This was not in response to external attacks, but because it had little relevance to the company’s mainstream businesses. He also said there are “absolutely no backdoors” in Huawei’s equipment and the company is willing to sign no-backdoor agreements with other countries.
He said issues of network security and information security should be viewed separately. The network of human society must not be prone to problems as it connects 6.5 billion people and tens of millions of banks and countless enterprises. Thirty years of applications in 170 countries and regions have proven that Huawei’s network, which serves 3 billion people, is secure, Ren said. However, information security is another question. He described Huawei as a provider of “pipelines” and “faucets,” saying operators and content providers must be responsible for contents “running in the pipelines,” the Shanghai Daily reports.
Ren confirmed that Huawei’s overseas smartphone business may drop by 40% this year, but the company has seen big growth in smartphones in China. Nicholas Negroponte said at the dialogue in Shenzhen that the U.S. is not an absolute leader in semiconductors anymore, and it is impossible for the U.S. administration to use Chinese companies’ reliance on foreign semiconductor products to pressure them. Lu Tingjie, Telecom Professor at Beijing University of Posts and Telecommunications, said any harm to Huawei will have broader ripple effects across the global tech arena and beyond due to the company’s huge size and its technological prowess in 5G.
Meanwhile, Huawei has filed a lawsuit against the U.S. Department of Commerce at the District Court in Washington for withholding Huawei’s equipment – a server and Ethernet switch – shipped to an independent lab in California to undergo certification testing in 2017. In September that year, when the equipment was to be shipped back to China, the U.S. government detained the shipment in Anchorage, Alaska, as the Commerce Department took time to investigate whether an export license was needed to ship it. In its lawsuit, Huawei said it had been waiting for almost two years for a decision. The U.S. government has “unlawfully withheld and unreasonably delayed” its responsibility to make a license determination and the equipment “remains in a bureaucratic limbo in an Alaskan warehouse,” the filing said.
U.S. President Donald Trump is also considering to require next-generation 5G cellular equipment used in the United States to be designed and manufactured outside China. The U.S. administration has asked telecom equipment makers if they can develop hardware including cellular-tower electronics as well as routers, switches, and software outside China. A list of proposed rules and regulations is expected to be issued in October.
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