That's just Huawei it goes, shrugs founder as analysts forecast sales slump for embattled biz

Don't worry, they have Plan Bs and spare tyres apparently

Analysts are predicting a big slump in sales for Huawei thanks to the US Department of Commerce and the ongoing trade wars.

But the majority of analysts are hedging their bets on exactly how big that slump will be. Most observers predict a fall in handset sales. Reuters managed to wring a figure of between 4 and 24 per cent from Fubon Research and Strategy Analytics.

Given Trump's seesawing, such an absurdly wide range seems fair. US firms were banned from any contact with Huawei then days later given a three-month reprieve. Trump has recently changed from describing Huawei as very dangerous to saying it could be included in a future trade deal.

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In a freewheeling interview with assorted media, Huawei's boss Ren Zhenfei waxed lyrical about his desire to continue working with international partners and downplayed the importance of the US market – where Huawei handset sales languish and are not sold by any major carrier.

Ren noted that Huawei works with dozens of US-based consultancies including IBM and Accenture and credited them with helping build the company. He also said that in 2000 Huawei was on the brink of selling to a US firm.

"While we were waiting for approval, the negotiation team, including me, all put on floral-print clothes, running and playing ping pong on the beach,"he reminisced.

But a last-minute change of directors saw the US board reject the deal. Ren said that since then the company knew it would "have to square off against the US when we reach the top".

He said the company had long run a "spare tyre" or Plan B strategy. He admitted that some minor products lack such a spare tyre and would be hit hard by US sanctions and likely phased out. But he insisted that for the most advanced technologies, and for 5G, there would not be much impact and it would take competitors two or three years to catch up.

Some observers noted that most chip fabs are either in the US or allied countries like Japan or Taiwan, and that even with the right expertise and funding, building a new fab is a slow and non-trivial business.

Ren insisted the company would not be slowed down by component shortages.


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He said: "Even if there is an insufficient supply from our partners, we will face no problems. This is because we can manufacture all the high-end chips we need ourselves. In the 'peaceful period', we adopted a '1+1' policy – half of our chips come from US companies and half from Huawei. Despite the much lower costs of our own chips, I would still buy higher-priced chips from the US. We cannot be isolated from the world. Instead, we should become part of it."

While China as a whole might have soured on Apple – Middle Kingdom handset sales in the last quarter of 2018 fell 18 per cent – Ren said his children prefer Apple devices over Huawei handsets. We do not know if that includes his daughter Meng Wanzhou currently under house arrest in Canada pending extradition to the US.

Although handsets are the most visible part of Huawei, it remains a massive player in telecoms and services. Mobile phones make up about 45 per cent of its revenue. It holds almost a third of 5G patents so will be getting paid regardless of who actually makes next-gen mobile network kit.

The long-term impact for Huawei, for a world left with potential zombie army of unpatched Huawei kit and for the US-China trade war remains extremely unclear. ®

PS: China warned it may make a "substantial" cut to its investments in the UK, if Huawei is banned from Britain's 5G network.

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