New US curb on Huawei 'threatens to undermine the entire industry'

Latest measure bans the Chinese firm from using chips designed in the US but produced elsewhere

Huawei rotating chairman Guo Ping speaks during the Huawei Global Analyst Summit 2020 at the Huawei headquarters in Shenzhen, China's southern Guangdong province on May 18, 2020.
 Chinese technology giant Huawei on May 18 assailed the latest US move to cut it off from semiconductor suppliers as a "pernicious" attack that will sow chaos in the global technology sector and other industries.
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A new ban imposed by the US Department of Commerce on Huawei is "arbitrary and pernicious”, the Chinese telecoms company said, adding that it  "threatens to undermine the entire industry".

“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,” Huawei said in a statement on Monday.

The department tightened restrictions on Huawei by banning companies from selling chips and other products which were made outside the US, but were "designed and produced using US technologies".

Huawei was placed on a Security Entity List by the US government last year because of concerns over the security of its technology  – a claim the company denies. The action meant US companies had to obtain a special license to sell products to Huawei. However, the Commerce Department said in its ruling that the company continued to use US software and technology to design semiconductors, "undermining the national security and foreign policy purposes of the Entity List by commissioning their production in overseas foundries using US equipment".“The US is leveraging its own technological strengths to crush companies outside its own borders ... this will only serve to undermine the trust international companies place in US technology and supply chains,” Huawei said.

Huawei employees wearing face masks walk inside the company's headquarters in Shenzhen in China's southern Guangdong province on May 18, 2020. China on May 17 warned it would take "necessary measures" to protect Huawei and other firms after the United States announced new restrictions on the tech giant's purchases of semiconductor technology. / AFP / NOEL CELIS

It added that the US government had “intentionally turned its back” on the interests of the Chinese company’s customers. “This goes against the US government’s claim that it is motivated by network security,” the statement said.

The Shenzhen-headquartered firm is a key provider of 5G components in markets outside the US. By the end of last year, Huawei said it had managed to secure 77 5G contracts globally, of which 12 are in the Middle East. Nearly half of its contracts are in Europe, where it faces tough competition from local companies such as Nokia, which has 63 contracts, and Ericsson with 81.

Huawei’s current chairman Guo Ping also hit back at the US government’s efforts to stop the Chinese tech giant from buying essential components.

“We still haven’t figured it out … the US government still persists in attacking Huawei, but what will that bring to the world?” Mr Guo asked on the stage at Huawei’s annual analyst summit on Monday.

The Chinese government's commerce ministry on  Sunday criticised the US government's action, adding that it would “take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprise".

Huawei’s full-year profit and revenue rose in 2019 despite restrictions from the US but the company is bracing for a tough 2020.

During an earnings call in March, the company said it is anticipating 2020 to be challenging because of the disruptions caused by the coronavirus outbreak and the continuing restrictions preventing US companies from trading with it.

The telecoms manufacturer posted a 19.1 per cent rise in last year’s revenue to $123 billion (Dh451.41bn) while its net profit rose 5.6 per cent to $9bn, the company said.

This was the second consecutive year that Huawei’s revenue crossed the $100bn mark.

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