Chinese tech giant Huawei has long been in the crosshairs of the United States government. In 2019, the US government placed Huawei on a blacklist, citing national security concerns, and imposed restrictions on the company’s ability to do business with American companies. This move has had significant consequences for Huawei, as the latest earnings report shows a sharp decline in profits.
Huawei’s earnings report for 2021 shows that the company’s net profits have dropped by more than 50% compared to the previous year. In 2020, the company reported a net profit of 64.6 billion yuan ($10 billion), but in 2021, that figure fell to 30.1 billion yuan ($4.6 billion). This significant reduction in profits is attributed to the impact of the US blacklist and the restrictions it has imposed on Huawei’s ability to do business.
The US government has accused Huawei of posing a national security risk, alleging that the company’s equipment could be used by the Chinese government for spying purposes. As a result, the US has placed Huawei on a blacklist, effectively banning American companies from doing business with the Chinese tech giant.
Huawei has repeatedly denied the allegations, and the Chinese government has accused the US of using national security concerns as an excuse to stifle China’s technological progress. Despite the denials, however, the US has continued to apply pressure on Huawei, and the latest earnings report shows that this pressure is taking a significant toll on the company’s bottom line.
Huawei has been forced to find ways to work around the restrictions imposed by the US blacklist, including developing its own operating system, called HarmonyOS, to replace Google’s Android operating system, which Huawei can no longer use on its smartphones. While this move has allowed Huawei to continue selling smartphones, it has also come at a significant cost, as the company has had to invest heavily in the development of HarmonyOS.
In addition to the development of HarmonyOS, Huawei has also been forced to scale back its business operations, particularly in the area of 5G infrastructure. The US restrictions have made it difficult for Huawei to do business with companies that use American-made technology, which has limited the company’s ability to expand its 5G business.
The impact of the US blacklist on Huawei’s business has been felt beyond China’s borders, as well. Huawei has been a major player in the global telecommunications market, particularly in developing countries where Huawei’s lower-cost equipment has been attractive to governments and telecom companies. However, the US restrictions have made it difficult for Huawei to do business in many of these countries, and the latest earnings report shows that the company’s revenues from outside of China have dropped significantly.
Despite the challenges posed by the US blacklist, Huawei remains committed to its business operations. In a statement accompanying the latest earnings report, Huawei’s rotating chairman, Guo Ping, said that the company “remains confident” in its ability to survive and thrive despite the challenges it faces.
However, Huawei’s situation remains precarious, and it is unclear how the company will be able to overcome the obstacles posed by the US blacklist. The Chinese government has made it clear that it will continue to support Huawei, but the company may need to find new ways to do business if it is to continue to be successful in the global market.
The US government’s actions against Huawei have been controversial, with some arguing that the restrictions imposed on the company are part of a broader effort by the US to contain China’s rise as a global economic and technological power. The impact of the US blacklist on Huawei’s business has also been felt by American companies, which have lost a major customer in the Chinese tech giant.
