Chinese vendor Huawei is not expecting the Biden administration to remove the company from the Entity List, the company’s rotating CEO, Eric Xu, said during a session with journalists at the Huawei Global Analyst Summit 2021.
“We believe that we will need to continue working and surviving while on the Entity List for a long time. We cannot develop our strategy based on wrong assumptions or unrealistic hopes. Our overall strategy and specific initiatives are all developed to ensure that we could survive and develop while remaining on the Entity List for a long time,” the executive said.
“Our goal for this year is still to survive. But we also hope, we could have some time this year to think about our next steps and see if we could live a bit better. As you know, in 2019 and 2020, we spent most of our time coping with the U.S. restrictions. We had little time to think about whether we could really survive, and how we could live better. After we spent a long time reviewing and adjusting our business portfolios, now we have much more confidence about our survival,” Xu added.
Commenting on the company’s current chip inventory, the executive said that he expected that some chip makers could be in a position to meet the huge demand in the Chinese market.
“Huawei is a large global buyer of chipsets and components. We were the third-largest buyer only after Apple and Samsung. In addition, China is a huge market with enormous demand for chipsets,” Xu said. “It’s a market of about $400 billion per year. Many other Chinese companies are also worried that what has happened to Huawei could happen to them as well, so they have similar demands like Huawei.”
“With such a huge demand, there will be companies that are willing to make the necessary investments and see if they could find a way to satisfy the needs of Huawei and other similar Chinese companies while ensuring compliance with the U.S. sanction rules. I hope that our global partners will eventually be able to do this. If our inventory lasts until that time, then that will help us address the problems we are facing. I believe that day will come.”
Huawei recently reported its sales revenues reached CNY 891.4 billion (USD 136.7 billion) in 2020, up 3.8% year-on-year while its net profit rose 3.2% to CNY 64.6 billion.
The company said that trade restrictions implemented by the U.S. government had impacted the company’s operations outside China.
In 2019, Huawei had recorded a 5.6% increase in profit and 19.1% rise in revenue.
China accounted for 65% of Huawei’s overall revenues last year, up compared to 59% the previous year.
In May 2019, the U.S. Department of Commerce added Huawei to its Entity List, a decision that effectively banned the company from buying parts and components from U.S. companies without U.S. government approval. Under the order, Huawei needs a U.S. government license to buy components from U.S. suppliers.
The U.S. government included Huawei in the Department of Commerce’s Entity List due to security concerns, as Washington believes that the Chinese government uses Huawei’s equipment for spying purposes.