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US Ban On Huawei To Hit The Company By $10-Billion In Revenues

US Ban On Huawei To Hit The Company By $10-Billion In Revenues
Chinese tech giant Huawei Technologies anticipates that its consumer devices business would potentially generate about US$10-billion less in annual revenues because of the United States  export restrictions as the company has been banned from purchasing components like semiconductors and software from all American companies. 
Huawei deputy chairman Eric Xu said Friday that the company is trying to find out ways to find replacement for its key suppliers in the US such as Cadence Design Systems and Synopsys. Xu added compared to the predictions made by the company founder Ren Zhengfei earlier, the overall loss to the company will be a “little less”.
Huawei has been facing the wrath of the Trump administration for over a year now over allegations that its equipment could have backdoors that can be used by Chinese agencies to spy on western countries. These allegations have been denied by Huawie multiple times.
Huawei on Friday launched its the Ascend 910, which is the most powerful artificial intelligence chipset manufactured by the company till date and one that is expected to be very competitive for the best products from other chip makers such as Qualcomm and Nvidia. Earlier this month, the company also provided a glimpse of its HarmonyOS which is an operational software that the company built in-house and could one day be a replacement for Google’s Android.
Xu told a news briefing in Shenzhen that chip-design software tools that were earlier supplied by Cadence and Synopsys is also being attempted to be replaced. He however did not offer any more details. “There were no chip design tools 10 years ago, but the industry still developed chips,” said Xu. He also added that the company did not view as must-haves for design the supplies made by Cadence and Synopsys. “Intel started to develop chips in the 1970s, when those companies didn’t exist.”
Earlier in May this year, Huawei was put on the so called ‘entity list’ of the US Commerce Department effectively banning it from doing any business with any American company even though it still is the largest manufacturer of telecommunication equipment maker in the world. The company has been hit hard by the ban despite a number of 90-day reprieves from the ban for getting supplies for those services and products that the company already has in place.
According to analysts, the impact of the upheavals would be widespread and painful even though the company is eventually brought in from the cold. The company has already reported a slowdown in sale growth for the second quarter compared to the previous quarter because of the impact of the US ban as the company was hit especially hard in revenues generated form its consumer business of products such as smartphones and laptops.
However, this is also helping Huawei to become more self reliant.
Semiconductor development is one such area that the company is currently focused on becoming self reliant through development of in-house expertise. It is also in line which China’s strategy of becoming a leader in chip technology and manufacturing.
”The 16 May sanctions incident had no impact on the execution of Huawei’s AI strategy nor commercialisation of AI products,” said Xu. “Our R&D project related to AI is building up steadily.”

Christopher J. Mitchell

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