Huawei says new US sanctions put its survival at stake

Huawei has warned that its survival is at stake following the US government’s latest efforts to cut the Chinese company off from international semiconductor supplies.

In its first official reaction to last Friday’s announcement by the Department of Commerce of the planned new restrictions, Huawei called Washington’s decision “arbitrary and pernicious”.

While the company said it was too early to define the consequences of the US’s planned stricter export controls for its business, it indicated that Washington’s move would deal a heavy blow. “We will now work hard to figure out how to survive,” said Guo Ping, rotating chairman, at Huawei’s annual analyst conference. “Survival is the keyword for us now.”

The US government, which believes that Huawei is helping the Chinese government conduct cyber-espionage and technology theft, put Huawei on an export control list a year ago, a move aimed at curbing the company’s access to US-made and designed semiconductors needed for products including telecoms network gear and smartphones.

But existing US export control rules contain enough loopholes for such supplies to continue. One key avenue has been through sales of chipsets manufactured outside the US, first and foremost by Taiwan Semiconductor Manufacturing (TSMC), the world’s largest contract chipmaker.

Washington now intends to amend the rules in a way that any foreign chip manufacturer aiming to sell semiconductors to Huawei using US-made equipment will have to apply for an extra licence — which industry sources expect to be denied. The Department of Commerce has said it will “narrowly and strategically target Huawei’s acquisition of semiconductors”.

Huawei missed its original revenue target for last year by $12bn due to restrictions resulting from last May’s listing and reported revenues of $123bn for 2019. But the company argued that the US’s latest move would have a significantly bigger impact.

“This new rule will impact the expansion, maintenance and continuous operations of networks worth hundreds of billions of dollars that we have rolled out in more than 170 countries,” it said in a statement.

“To attack a leading company from another country, the US government has intentionally turned its back on the interests of Huawei’s customers and consumers. This goes against the US government’s claim that it is motivated by network security.”

It also claimed the US’s campaign against Huawei would damage the global semiconductor industry.

Earlier on Monday, Richard Yu, head of Huawei’s consumer electronics unit, accused the US of fighting to defend its “technology hegemony”. “The so-called cyber security reasons are merely an excuse,” he wrote on WeChat.

This article has been amended since publication to correct the 2019 revenue figure.

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