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Impact Of US Ban On Hauwei More Than Expected, Revenue Loss Of $30Billion: CEO

Impact Of US Ban On Hauwei More Than Expected, Revenue Loss Of $30Billion: CEO
The ban by the United States government on China's Huawei Technologies Co Ltd has hit the company more than expected, said the company’s founder and CEO Ren Zhengfei. This has also forced the company to reduce its revenues expectations for the current year.
On multiple earlier occasions, Huawei has been reiterating that the ban by the US on it would not have any significant impact because the company was technologically self-sufficient. This comment from Ren and the lowering of the revenue expectations is the first time that the company has quantified the hit because of the US ban, saying that it would cost it $30 billion in revenues.
Earlier in May, the US Commerce Department had put Huawei on its so called ‘entity list’ which effectively blacklisted it and prevented all American companies from having any business relations with the Chinese firm in terms of both products and technology. The charges against Huawei was that it is a threat to US national security. The ban also means that Huawie, the largest telecommunications equipment maker and the second largest maker of smartphones in the world, would require special approval from the US government to do any business with American companies.
All allegations against it have been denied repeatedly by Huawei.
The US ban has forced a number of partner companies to limit or sever business ties with Huawei including Alphabet Inc's Google and the UK based chip designer ARM.
Speaking at the company's Shenzhen headquarters on Monday, Ren said that the company was not expecting the U.S. determination designed to "crack" the company would be "so strong and so pervasive".
"We did not expect they would attack us on so many aspects," Ren said, adding he expects a revival in business in 2021. We cannot get components supply, 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.
The revenues generated by Huawei last year was 721.2 billion yuan or $104 billion and now the company expects that for the entire of 2019, Huawei would be able to generate revenues of $100, Ren said. The company had earlier predicted the revenues for the entire of 2019 to be between $125 billion and $130 billion according to the fluctuations in foreign currency exchange rates.
The sanctions and banning on Huawei by the Trump administration of the US is also considered to be a part of the pressure tactics used by the US to force the Chinese government to agree to a trade deal with the US. The trade war between the two largest economies of the world has intensified in recent months with the US imposing increased tariffs on Chinese goods imported into the US from 10 per cent to 25 per cent. China are retaliated with tariffs of its own on US imports.
Chinese leaders have also alleged that the Trump administration has targeted Huawie because it wants to undermine the progress made by Chinese companies in the key semiconductor business in which the country is trying to achieve self sufficiency.

Christopher J. Mitchell

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