Huawei expects $10 bn revenue cut in smartphone business

Huawei said on Friday that the revenue of its smartphone unit will be lower by about $10 billion this year due to the impact of U.S. trade restrictions.
Huawei phone campaign in ChinaHuawei’s consumer business group reported revenue of 349 billion yuan or $49.23 billion – mainly from the smartphone sales — in 2018.

China-based Huawei Technologies’ $100 billion revenue from smartphone, telecom network and enterprise has been hit hard since mid-May after Washington put the world’s second-largest smartphone maker in an Entity List that threatens to cut off its access to essential U.S. components and technology.

Huawei CEO Ren Zhengfei said in June that the blacklisting by the United States federal government would hit the technology company’s revenue by $30 billion, leaving it without any revenue growth for 2019.

“It is going to be a little less than that. You have to wait till our results in March,” Eric Xu, Huawei’s deputy chairman, said at a news conference to introduce new artificial intelligence (AI) chips at its headquarters in Shenzhen.

Huawei’s consumer business group is racing to develop an operating system (OS) of its own in preparation for the worst case scenario of being stripped of essential Google Android apps – is doing much better this year than initially feared, Xu said.

Huawei is the #2 smartphone maker in the world – behind Samsung but ahead of iPhone maker Apple.

Huawei’s smartphone sales in China surged by a nearly a third compared to a year ago to a record high in the June quarter, helping it more than offset a shipments slump in the global market. Huawei said last month the consumer business group turned in revenue of 221 billion yuan in the first half of 2019.

Washington said this week that it will extend by 90 days a reprieve that permits Huawei to buy from U.S. firms in order to supply existing customers, while adding more than 40 of Huawei’s units to its economic blacklist.

Xu said the reprieve was meaningless to Huawei, whose employees are fully prepared to live and work with the ban.

Huawei said on Friday that its chips, including a new AI chipset called the Ascend 910, are for its own use and it does not aim to become a chip vendor.

“We are open to discussing partnerships with AI chipset development companies so there are chipsets of various kinds that could be used in Huawei products. So, positioning our chipset business as a standalone is a scenario that is not going to happen,” Xu said.

The Ascend 910 AI processor, a 7-nanometer chipset designed by Huawei’s semiconductor unit HiSilicon based on ARM architecture for AI model training, has more computing power than any other AI chipset in the world, Xu said.

British chip designer ARM earlier this year announced it was halting deals with Huawei in compliance with the ban.

Huawei said it was no longer able to work with U.S. chip designers such as Cadence Design Systems and Synopsys due to the trade restrictions, but the company has alternatives.