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Huawei chairman says increased pressure from U.S. may trigger retaliation

Huawei‘s chairman warned Tuesday that more U.S. moves to increase pressure on the Chinese tech giant might trigger retaliation by Beijing that could damage its worldwide industry.

Huawei Technologies Ltd., which makes smartphones and network equipment, reported that its 2019 sales rose by double digits despite curbs imposed in May on its access to U.S. components and technology. But the chairman, Eric Xu, said 2020 will be its “most difficult year” as Huawei struggles with the sanctions and the coronavirus pandemic.

Huawei is at the centre of tensions with Washington over China’s technology ambitions and possible spying that helped to spark Trump’s tariff war with Beijing in 2018.

Xu said he couldn’t confirm news reports U.S. President Donald Trump might try to extend controls to block access to foreign-made products that contain U.S. technology. Xu said Huawei can find other sources but warned more pressure might trigger Chinese retaliation against American companies.

“I think the Chinese government will not just stand by and watch Huawei be slaughtered,” Xu said at a news conference in the southern city of Shenzhen. He said U.S. pressure on foreign suppliers “will be destructive to the global technology ecosystem.”

“If the Chinese government followed through with countermeasures, the impact on the global industry would be astonishing,” Xu said. “It’s not only going to be one company, Huawei, that could be destroyed.”

Huawei, China’s first global tech brand, denies U.S. accusations the company is controlled by the ruling Communist Party or facilitates Chinese spying. The company says it is owned by the 104,572 members of its 194,000-member workforce who are Chinese citizens.

Chinese officials say the Trump administration is abusing national security claims to restrain a rival to U.S. tech companies.

Last year’s sales rose 19.1 per cent over 2018 to 858.8 billion yuan ($123 billion), in line with the previous year’s 19.5 per cent gain, the company reported. Profit increased 5.6 per cent to 62.7 billion yuan ($9 billion), decelerating from 2018’s 25 per cent jump.

Huawei had to spend heavily to replace American components in its products and find new suppliers after Trump on May 16 approved the sanctions that if fully enforced could cut off access to most U.S. components and technology. Washington has granted extensions for some products, but Huawei says it expects the barriers to be enforced.

The company, the world’s No. 2 smartphone brand behind Samsung, said 2019 handset sales rose 15 per cent to 240 million units.

Demand for Huawei smartphones in markets outside China weakened “very fast” after the May 16 order, Xu said. He said its consumer unit lost at least an estimated $10 billion in potential sales, but the business started to bounce back in the final quarter of 2019.

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