Huawei Technologies founder and CEO Ren Zhengfei said that company’s revenue would drop to around $100 billion this year and the next due to the impact of a U.S. ban on sourcing of components from the United States.
China-based Huawei had reported revenue of 721.2 billion yuan or $104.16 billion last year. Huawei earlier said it was aiming to achieve revenue of $125 billion in 2019 mainly powered by its smartphone business.
Huawei is the number one telecom equipment maker and the number three smartphone vendor globally.
This is the first time that Huawei has quantified the impact of the U.S. action against the company and Ren’s downbeat assessment comes after weeks of defiant comments from company executives who maintained Huawei was technologically self-sufficient, Reuters reported.
Huawei had not expected that U.S. determination to crack the technology company would be so strong and so pervasive, Ren said, speaking at the company’s Shenzhen headquarters on Monday.
The United States has put Huawei on a blacklist that effectively bans American companies from doing business with the Chinese firm, alleging that Huawei’s products could allow China to spy on U.S. communications. The Donald Trump administration never revealed proof on its allegations.
The ban has forced companies, including Google, Qualcomm, Intel, Microsoft, Broadcom, ARM, among others, to limit or cease their relationships with Huawei.
Ren said on Monday that Huawei’s international smartphone shipments will drop 40 percent without specifying a period. Bloomberg wire agency reported on Sunday that the tech giant was preparing for a 40 percent to 60 percent decline in international smartphone shipments.
Huawei has already stopped supplying smartphones and telecom networking and enterprise networking products to the United States.
The Huawei founder admitted that it cannot source components, cannot participate in many international organizations, cannot work closely with many universities, cannot use anything with U.S. components, and cannot even establish connection with networks that use such components.
Ren said Huawei will not cut research and development spending despite the expected hit to the company’s finances and would not have large-scale job cut.