US sanctions hammer Huawei revenues but unite company: CFO Meng

us sanctions huawei
Customers and workers at a Huawei store at Sandton City mall in Sandton, South Africa February 16, 2022. REUTERS/Siphiwe Sibeko

SHANGHAI (Reuters) – US sanctions and pressure on Huawei Technologies have served to strengthen the resolve of the Chinese telecoms giant, finance chief Meng Wanzhou said on Monday after its first set of results since her return from nearly three years’ detention in Canada.

The daughter of Huawei founder Ren Zhengfei played a central role in the company’s tussle with the United States, having been detained in Canada in 2018 over alleged attempts by Huawei-linked companies to sell equipment to Iran in breach of US sanctions.

The United States then imposed a series of trade restrictions on the company throughout 2019 and 2020, citing national security concerns. This impeded Huawei’s ability to design its own chips and to source components from outside vendors, crippling its smartphone businesses.

Meng was allowed to return to China in September after agreement with US prosecutors to end a bank fraud case.

“Over the past few years our teams have undertaken a lot of pressure, and along this process we have become more united and our strategy has become clearer,” she told reporters in her first public appearance at a company event, adding that Huawei had become more capable of dealing with uncertainty.

Asked what she had been doing since she returned to work six months ago, Meng said the world had changed so much.

“I’ve been learning and trying to catch up,” she said.

Steep revenue drop

Washington’s sanctions have continued to weigh heavily on Huawei’s business.

Full-year revenue tumbled 29% last year to 636.8 billion yuan ($100 billion). Net profit jumped by a record 76% to 113.7 billion yuan, but that was mainly thanks to the sale of its Honor handset division and server businesses under US pressure.

Meng attributed the revenue drop to the impact of US sanctions on the smartphone business, adding that the COVID-19 pandemic, supply chain issues and slowing demand for 5G base stations in China were also contributing factors.

Guo Ping, Huawei’s current rotating chairman, said the company hopes to find a solution to sustain its smartphone division and will ramp up investment in research seeking microchip “breakthroughs” after losing access to certain advanced technologies because of US sanctions.

Though Guo did not directly answer repeated questions on whether Huawei planned to build its own chip manufacturing facility, he highlighted artificial intelligence (AI), WiFi-6 connectivity, green energy, automotive and cloud computing as key areas for R&D and new business opportunities.

Asked if Huawei would be affected by US sanctions against Russia, Guo said the company is evaluating related policies, adding that it has no plans to take its mobile operating system Harmony OS overseas.

Many observers have questioned whether Chinese companies such as Huawei can fill the void left by overseas companies that have exited Russia in protest over the conflict in Ukraine.

($1 = 6.3658 Chinese yuan renminbi)

(By Josh Horwitz; Reporting by Josh Horwitz; Editing by Kenneth Maxwell, Brenda Goh and David Goodman)

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