Asia

Huawei exec calls for sanctions 'rethink' amid record profit

BEIJING – As Huawei, the Chinese telecommunications giant, reported a record profit, a top company executive on Wednesday (March 31) called on the United States to “rethink” sanctions and restrictions against the firm that he said have hurt all sides of its supply chain.

Huawei said net profit rose 3.2 per cent to 64.6 billion yuan (S$13.2 billion) last year, and revenue was 3.8 per cent higher at 891.4 billion yuan.

Smartphone sales were hit hard after the US cut the firm off from key component makers and banned it from using Google’s Android system, but its consumer electronics division – which accounts for more than 50 per cent of revenue – still managed a 3.3 per cent sales growth in 2020 amid the global pandemic.

The world’s top manufacturer of telecom network equipment and a leading smartphone brand, Huawei has been caught in the crosshairs of ongoing tensions between China and the US since the former Trump administration targeted the company.

“We see that our upstream suppliers are affected, particularly those in the US; Huawei is affected; and our consumers are affected too,” rotating chairman Ken Hu told a press conference in Shenzhen, referring to the US restrictions.

“So if a political decision affects the entire supply chain, then surely that should be reviewed and corrected?”

The US government has placed 60 Chinese companies, including chipmaker SMIC, tech giant Huawei and surveillance equipment firm Hikvision on a restricted trade list, citing national security risks and foreign policy interests.

Last May, the US Department of Commerce also announced a ban on chipmakers using US technology from supplying semiconductors to Huawei.

It means that even chipmakers like Taiwan’s TSMC, which was contracted by Huawei to manufacture its in-house designed Kirin mobile phone chip, can no longer continue the partnership.

The company is known to have stockpiled chips before the ban took effect last year, but Mr Hu avoided saying how much longer supplies would last.

Huawei said it is now moving towards an emphasis on its enterprise business, which last year grew 23 per cent.

It is also diversifying to include enterprise and cloud computing, Internet-of-things devices and networks, and other business segments related to the advent of 5G networks, an area of strength, while refocusing on China.

A lion’s share of 2020 revenue was generated domestically, which senior executives credit to the country’s continuing 5G roll-out, as well as it being the only major economy to pose positive growth last year. Revenue dropped 24.2 per cent in the US, 12.2 per cent in Europe, Middle East and Africa, and 8.7 per cent in the Asia-Pacific region.

With the US locked in a bitter rivalry with China, there are fears in the West that Beijing could use Huawei’s systems for espionage, allegations the Chinese government has strongly denied. Huawei has been hit nonetheless, with its carrier business blocked from entering several markets.

Hopes of a reset were dashed two weeks ago when US regulators included Huawei on a list of Chinese telecom companies deemed to pose a national security risk.

In South-east Asia, the firm will continue focusing on its core carrier business, while also looking to expand in areas like cloud computing, said Asia Pacific vice-president Jay Chen in a call with journalists.

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