Huawei has reacted swiftly to US sanctions by changing its supply chain, and as a result, its performance in 2019 was better than expected.
Although it was besieged by the US during the year, Chinese Huawei proved to be impact resistant.
Chinese telecommunications giant revenue rose 18% in 2019 on a year-over-year basis, marking only a slight change from 19.5% in 2018. In addition, Chinese company sales rose to $ 122 billion, according to its chairman Eric Xu.
Since May 2019, the United States has banned the export of American components and technology to the Chinese company, claiming to endanger national security. Following the announcement of the ban, Huawei founder Ren Zhengfei predicted that the company’s revenue would remain stable until 2020, at about $ 100 billion. Huawei, however, reacted swiftly to US sanctions by changing its supply chain, and as a result, its performance in 2019 was better than expected.
The sanctions prohibit all US technology exports to Huawei unless specifically authorized. However, many US companies were able to circumvent the ban by transferring production to third countries and then selling them to the Chinese company. “Huawei did well this year for two reasons: it replaced American parts extremely quickly and the law still allows the company to buy products from many US companies”, Dan Wang of the Chinese research firm Gavekal Dragonomics commented in the Financial Times. “There is nevertheless a risk for the US government to tighten the rifle” and eliminate any possibility for companies to sell to Huawei, as Wang added.
To date, US President Donald Trump has been pressing his allies not to include Huawei in its bid to take over 5G networks. However, India announced on Monday that it would allow the Chinese telecommunications company to take part in the trials. This is a huge victory, as India is the second-largest Internet market in the world – after China – with at least 600 million users. “We firmly believe that only technological innovations and high-quality networks will be the key to the renewal of the Indian telecommunications industry”, Huawei announced Monday.
In 2019, Huawei’s 240 million smartphones were sold, and in 2018, 206 million. Many analysts, of course, consider this to be a very difficult time for the company, as mobile phones sold abroad do not have Google services due to US sanctions. The company is trying to attract companies that will develop similar mobile applications. For the time being, the alternative applications offered by Huawei appear to be unsatisfying for consumers, who are mainly seeking an alternative application for Google Maps.
The president of the Chinese telecommunications giant expects Huawei will not grow at the same pace in 2020. “It will be a difficult year for us”, Eric Xu announced, adding that the company will remain in “blacklist” of US companies that receive sanctions.