Huawei sees sharp slowdown in growth as UK weighs 5G ban on Chinese giant

A 5G logo is seen at a Huawei Authorized Experience Store on May 29, 2020 in Beijing, China.

Qin Luyao | VCG | fake pictures

Huawei reported a sharp slowdown in growth during the first half of 2020 as the company continued to see the impact of US sanctions and the global coronavirus pandemic.

Meanwhile, the Chinese tech giant is also awaiting a decision, expected to be delivered on Tuesday, by the UK government on whether it will be allowed to participate in the country’s 5G networks.

The Shenzhen-based company reported revenue of 454 billion yuan, or $ 64.23 billion, according to the exchange rate in the company’s earnings release. That represents a 13.1% year-over-year increase and slower first half revenue growth since the first six months of 2013.

Huawei has likely felt some impact from the coronavirus pandemic that has damaged the global economy. But it also continues to be hit by U.S. sanctions. Last year, Huawei was blacklisted in the United States known as the “Entity List,” which restricted its access to American technology.

It meant that Huawei was no longer able to use Google Android licensed software and services on its mobile phones, something it had relied on to succeed in international markets outside of China.

While Huawei managed to sustain growth in its consumer division in the first half of 2020, its largest business by revenue, it did so by increasing its focus on the China market. CNBC recently reported that Huawei has seen its market share drop in some key international markets this year.

In May, Washington introduced a new rule requiring foreign manufacturers using US chip-making equipment to obtain a license before they are allowed to sell semiconductors to Huawei.

There is also no indication that the United States licenses. Chips that were in production when that rule went into effect could be shipped to Huawei as long as they were completed within 120 days from May 15.

Huawei previously said that its business “will inevitably be affected,” but has yet to give a clear picture of the exact financial impact. Analysts previously told CNBC that the move could be a major blow to Huawei, as it relies heavily on Taiwan chipmaker TSMC for most of its semiconductors. This rule, in theory, would harm your ability to obtain TSMC chips.

UK decision pending

Meanwhile, Huawei faces other headwinds.

On Tuesday, UK Prime Minister Boris Johnson will convene his National Security Council (NSC) to discuss Huawei’s future on the country’s 5G networks.

In January, the United Kingdom said Huawei may play a limited role in launching the nation’s 5G.

However, the UK’s National Cyber ​​Security Center (NCSC) launched an emergency review of Huawei’s role shortly after Washington’s latest round of semiconductor-related sanctions against Huawei.

Earlier this month, newspapers The Sunday Times and The Daily Telegraph reported that the UK is drawing up plans to tell operators to stop buying Huawei equipment and to also phase out existing equipment from the country’s telecommunications networks.

The NSC will review the NCSC report on Tuesday and Oliver Dowden, UK Secretary of State for Digital, Culture, Media and Sport, is expected to address the British Parliament on the matter.

UK telecom operators warned that measures to remove existing equipment from Huawei could cost “billions” and potentially cause network outages.


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