Is this the “live-or-die moment” for Huawei? Founder Ren Zhengfei certainly thinks so.
The telecom group has been caught in the cross-fire of the trade war between China and the United States, which is now entering a second year.
Branded a “national security threat” by US President Donald Trump earlier this week, the flagship firm of China’s high-tech sector is in “battle mode.”
“The company is facing a live-or-die moment,” Ren, a former People’s Liberation Army officer, said in a memo, which was confirmed by Huawei to the Reuters news agency.
“If you cannot do the job, then make way for our tank to roll … And if you want to come on the battlefield, you can tie a rope around the ‘tank’ to pull it along, everyone needs this sort of determination,” he added, underscoring the military metaphors.
Ren’s comments came after Washington announced an extended 90-day reprieve, allowing Huawei to buy crucial components, such as semiconductors, from US companies.
At the same time, at least 46 affiliates, including research facilities, have been added to what is a US Commerce Department blacklist.
To combat the de-facto ban in the US, Huawei has upgraded chip production, rolled out a new operating system in Harmony, in case it is blocked from using Google, and launched a new 5G smartphone.
Last month, the privately-owned business confirmed that revenue had jumped by 23.2% in the first half of the year compared to the same period in 2018. Net profit was also up by 8.7%, according to the Chinese conglomerate without expanding on the figures.
A more in-depth guide to the state of Huawei’s fiscal health was highlighted in Ren’s memo.
“In the first half, our results looked good, [but] it is likely because our Chinese clients were sympathetic and made payments in time, the big volume made cash-flow look good, this doesn’t represent the real situation,” he said.
Huawei employs about 190,00 staff worldwide and has strengthened its 5G grip after signing 46 commercial contracts with plans to ship more than 100,000 base stations to run the super-fast networks.
These will power ‘smart factories’, the Internet of Things and an array of sectors in a new automated world.
Still, it remains dependent on foreign firms, purchasing components worth US$67 billion each year, including around $11 billion from US suppliers.
Ren, though, was extremely bullish about the future.
“In three [to] five years time, Huawei will be flowing with new blood,” Ren said in the memo. “After we survive the most critical moment in history, a new army would be born. To do what? Dominate the world.”