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Huawei growth slows as US restrictions begin to hit home

Huawei
(Image credit: Future)

Huawei says revenues rose by 9.9% during the first nine months of 2020, but there is evidence that sanctions and pressure from the US government are taking its toll on the company’s financial performance.

Revenues rose to 671.3 billion CNY (£77bn), but the rate of growth is significantly lower than the 24.4% it posted during the same period last year.

The Chinese mobile giant did not break this figure down any further, but it’s not presumptuous to suggest that both its consumer and business divisions are suffering from Washington’s hostilities as well as the challenges caused by the coronavirus pandemic.

Huawei results

“As the world grapples with COVID-19, Huawei's global supply chain is being put under intense pressure and its production and operations face significant challenges,” said Huawei. “The company continues to do its best to find solutions, survive and forge forward, and fulfil its obligations to customers and suppliers.”

Huawei has been on the US ‘non-entity’ list since last year, a status that prevents US companies from doing business with it without a licence. This effective blacklisting has limited Huawei’s access to key US technologies such as the Android operating system.

That was already bad enough but earlier this year the US government closed what it believed to be a “technical loophole” that allowed chipmakers to ensure their components are not classified as ‘US-made’ despite including American technologies.

Although Huawei has worked hard to reduce its dependency on the US, the ruling threatens the future of its smartphone business. The company has already confirmed it will stop the manufacture of its advanced Kirin smartphone chips, threatening the supply of the recently announced Huawei Mate 40 flagship device and the development of new handsets.

Reports earlier this week suggested Huawei was considering a sale of its Honor division so it could focus all its efforts on the high-end market.

Meanwhile, the US government has been putting pressure on governments around the world to ban operators from using Huawei telecoms equipment in their 5G networks. The UK and Sweden are among those to exclude the company, while operators in other countries are switching to kit made by rivals Ericsson and Nokia.