Huawei says sales up 23% despite US controls

Huawei chairman expressed confidence Tuesday the Chinese tech giant will “enter a new period of growth.

Huawei’s sales rose by double digits in the first half of this year despite being blacklisted by Washington and its chairman, saying US pressure has “galvanised our people,” expressed confidence Tuesday the Chinese tech giant will “enter a new period of growth.” Sales in the six months through June rose 23.2% over a year earlier to 401.3bn yuan ($58.3bn), according to Liang. That was up from 2018′s full-year growth rate of 19.5%, but Liang warned Huawei will “face difficulties” in the second half.

Huawei Technologies Ltd., the biggest maker of network gear for phone companies and the No. 2 smartphone brand, is scrambling to preserve its business after the Trump administration blocked access to US components and technology in May on security grounds. Sales have suffered “some impact” but Huawei avoided disruption in shipments to customers, Liang Hua said at a news conference at its headquarters in Shenzhen, near Hong Kong. He said Huawei is reviewing its product lineup to make sure it can fill orders without US components if necessary.

American pressure “has galvanized our people and reinvigorated the company,” Liang said.

“We believe we will get through the difficulties and challenges in the short term and enter into a new period of growth,” he said.

Washington says Huawei is a security risk, an accusation the company denies. American officials also see Huawei as a competitive threat and a recipient of official Chinese support for technology development they say is based on improper subsidies and stealing or pressuring foreign companies to hand over know-how.

Smartphone shipments rose 24% from a year ago to 118 million handsets, he said.

Liang declined to give a forecast of second-half sales, but said, “I am very confident in our full-year growth.”

At the start of his presentation, a photo of a fighter plane in flight despite being hit by gunfire was projected onto a screen beside Liang. He said, “like this airplane riddled with bullet holes, we stayed the course.”

Huawei’s resilience reflects its financial and technological strength compared with its smaller Chinese rival, ZTE Corp., which was nearly driven into bankruptcy last year by a ban on access to US technology over its sales to Iran and North Korea. President Donald Trump restored access after ZTE paid a $1bn fine and replaced its executive team.

Huawei has developed its own low-end chips for use in entry-level smartphones and servers but still needs US chips and other components for its most advanced products.

Liang said Huawei plans to increase this year’s research and development spending to 120bn yuan ($17bn). That would be a 20% increase over 2018 spending, which already was among the highest for any global company.

Washington’s decision to add Huawei to an “entity list” of foreign companies that require official permission to buy technology sent shock waves through US industry. Huawei is one of the biggest buyers of chips and other components and paid American suppliers some $12bn last year.

Trump agreed to allow vendors to sell widely available technologies to Huawei. But Liang said “we have not seen a resumption of supplies” of components needed for its core products.

Trump has suggested he might lift controls on Huawei if Washington and Beijing reach a deal to end a tariff war over American complaints about China’s trade surplus and technology ambitions.

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