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Huawei CEO admits growth will decline for at least two years

a coffee with ren

In one of his now familiar set-piece interview sessions, Huawei CEO Ren Zhengfei admitted the current situation will cost it at least $30 billion in revenues for 2019 and 2020.

For some reason Huawei decided to theme its latest bit of PR ‘A coffee with Ren’. This was an apparent attempt to demonstrate once more how open Huawei is and how willing it is to engage with the global community. “As you know Huawei’s culture is very open,” said Tian Wei, the host of the interview at the start of the discussion, which was broadcast by Chinese state-owned CGTN. How much that choice of partner helped Huawei’s claims that it’s wholly independent of the state is open to debate.

Also joining Ren for coffee and light chit-chat were his Huawei colleague Catherine Chen and two US veteran technologists: Nicholas Negroponte and George Gilder. They seemed to be there in a friendly capacity, making it clear from the start that they disagree with the actions the US is taking against Huawei and stressing the importance of open collaboration. Ren agreed.

The host soon cut to the chase and asked Ren how he was adjusting to all these US companies moving to distance themselves from Huawei. He reiterated that he doesn’t hold it against them as they’re just doing what politicians tell them. One of the consistent themes of Ren’s ongoing press tour has been stress that his problem is with the US state, not its companies.

Unprompted Ren put some numbers on the bottom line effect of all this for the first time. “In the next two years I think we will reduce our capacity. Our revenue will be down by around $30 billion compared to forecasts, so our sales revenue this year and next will be around $100 billion. By 2020 we may regain our growth momentum, to contribute more to human society.

“In the next two years we’re going to do a lot of the switch over of different product versions, that will take time but after that step we will be stronger… We are strong, I think that there is no way we can be beaten to death.” That last comment drew ecstatic applause from the host.

You can see the rest of the conversation in the video embedded below, which for some reason only starts after the above exchange. Another persistent theme from Ren is that Huawei wants to contribute to humanity, which seems to be a coded way of saying that being horrid to Huawei will ultimately make everyone worse off, a sentiment shared by the US technologists.

This philanthropic calling means Huawei isn’t going to cut down on research and development spend, insisted Ren, although the need to diversify away from the US supply chain as quickly as possible would seem to be a fairly strong incentive too. Ren was asked by the host if Huawei has security backdoors in its gear and he said it doesn’t.

Deadlines prevented us from watching the rest of the interview that you can see below. Huawei revenues grew by 20% last year to $107 billion and were apparently forecast to repeat that growth. Ren says they’ll now shrink this year and be flat next year, but even that may be optimistic, as is his hope that Huawei will be largely independent of the US supply chain by 2021. Huawei is trying to portray itself as a victim while still remaining strong in spite of it, which seems reasonable considering the circumstances.

 

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