Huawei Downgraded Its Earnings Forecast By $30 Billion In Next Two Years
Despite initially downplaying the effects of the ongoing trade war between China and the United States on its bottom line, Huawei has now announced that it expects dramatic losses in the coming years.
According to the company's CEO, Ren Zhenfei, Huawei is expecting a loss of around $30 billion over the next two years. The executive blamed the loss on the ongoing trade dispute and the United States' trade ban against it.
During a panel discussion at the company's headquarters in Shenzhen, Ren revealed his surprise over the recent turn of events in the ongoing trade dispute.
The executive mentioned that he never thought that the United States would take the dispute this far and that its determination to take Huawei down was this strong. Ren admitted that the company was now finding it very difficult to get components and supplies. It has apparently also become very difficult for it to participate in international organizations.
Not being able to acquire or use anything with US components has hampered the company's growth and Ren believes that this will have deeper repercussions down the road. Huawei effectively lowered its revenue targets for the next two years, downgrading it from $125 billion to less than $100 billion. Last year, Huawei was able to make $105 billion in revenues.
As part of its strategy to counter the effects of the US' sanctions against it, Huawei announced that it will be significantly lowering its capacity over the next two years.
Huawei's expects a drop of around 40 percent in its international smartphone sales, which means that it will need to drop its production to compensate.
Ren explained that he does not blame American businesses for the company's predicament. The executive instead blamed the entire situation on "certain politicians" who had different perspectives. During his talk, Ren cautioned that if both countries go down the same path, no winners will emerge from the squabble.
Despite the company's predicament, which Ren described as similar to a "badly damaged airplane," the executive was still confident that the company can still move forward and that it will be working hard to ensure that everyone in the company still had their jobs to come back to.
Huawei is also planning to ramp up its efforts to collaborate with multinational companies, at least with those that are still willing to work with them. Huawei still claims that it could have become the world's number one smartphone manufacturer were it not for "unexpected" circumstances.