Chinese President Xi Jinping (left) with Huawei president Ren Zhengfei. Picture: REUTERS/MATTHEW LLOYD/POOL
Chinese President Xi Jinping (left) with Huawei president Ren Zhengfei. Picture: REUTERS/MATTHEW LLOYD/POOL

Hong Kong/Shanghai — Chinese technology giant Huawei said on Friday that the effect of US trade restrictions on its business will be less than it initially feared, though the curbs could push its smartphone unit’s revenue lower by about $10bn in 2019.

Huawei’s $100bn business has been hit hard since mid-May after Washington put the world’s second-largest smartphone maker on a so-called entity list that threatens to cut off its access to essential US components and technology.

In its first assessment of the impact of the restrictions, Huawei founder and CEO Ren Zhengfei said in June that the blacklisting would hit the company’s revenue by $30bn, leaving it without any top-line growth for 2019.

“It seems it is going to be a little less than that, but you have to wait till our results in March,” Eric Xu, Huawei’s deputy chair, said at a news conference to introduce new artificial intelligence (AI) chips at its headquarters in Shenzhen.

Huawei’s consumer business group — which includes the smartphones business and is racing to develop an operating system of its own in preparation for the worst-case scenario of being stripped of essential Google Android apps — is doing “much better” this year than initially feared, Xu said. “But a reduction of more than $10bn could happen”. Huawei’s consumer business group reported revenue of 349-billion yuan in 2018.

Spurred by promotions and patriotic purchases, Huawei’s smartphone sales in China surged by a nearly a third compared to 2018 to a record high in the June quarter, helping it more than offset a shipments slump in the global market. Huawei said last month that the consumer business group turned in revenue of 221-billion yuan in the first half of 2019.

In a temporary relief to Huawei, Washington said this week that it will extend a reprieve that permits Huawei to buy from US firms to supply existing customers by 90 days, while adding more than 40 of Huawei’s units to its economic blacklist.

Xu said the reprieve was “meaningless” to Huawei, whose employees are “fully prepared” to live and work with the ban.

Huawei, which has been developing its own chips to reduce its reliance on foreign technologies, reiterated on Friday that its chips, including a new AI chip set it launched on Friday called the Ascend 910, are for its own use and it does not aim to become a chip vendor.

“We are open to discussing partnerships with AI chip set development companies so there are chip sets of various kinds that could be used in Huawei products. So, positioning our chip set business as a standalone is a scenario that is not going to happen,” Xu said.

The Ascend 910 AI processor, a 7-nanometre chip set designed by Huawei’s semi-conductor unit HiSilicon based on ARM architecture for AI model training, has more computing power than any other AI chip set in the world, Xu said.

British chip designer ARM earlier in 2019 announced it was halting deals with Huawei in compliance with the ban, dealing a blow to Huawei, but Xu said Huawei’s perpetual ownership of the ARMv8 licence means the Ascend 910 chip set will not be affected.

Huawei said it is no longer able to work with US chip designers, such as Cadence Design Systems and Synopsys, due to the trade restrictions, but the company has alternatives.

Reuters