Huawei, Pummeled by U.S. Sanctions, Reports Plunge in Profit

American officials have long suspected that Huawei had close ties to the Chinese government, concerned that its technologies, such as 5G telecommunications equipment, could be used as surveillance tools. Huawei, a private company, denies it has any state ties.

The Trump administration began to restrict semiconductor sales to Huawei in 2019. Last year, the Biden administration expanded those controls, cutting Huawei’s access to both U.S. consumers and suppliers and issuing a punishing freeze on chip-making equipment to large swaths of China’s semiconductor industry.

Those moves amounted to a “near complete embargo of U.S. technology and U.S. goods” to Huawei, said Daniel B. Pickard, a lawyer at Buchanan Ingersoll Rooney and an expert on U.S. export controls. “I always think about Cuba, stuck in the 1950s and 1960s purely as a result of a unilateral embargo by the United States.”

The steep drop in profit, as well as Huawei’s acknowledgment of its economic challenges, was emblematic of the new economic reality for some Chinese companies. Last week, the chief executive of TikTok, which is owned by the Chinese company ByteDance, withstood five hours of hostile questioning at a hearing before U.S. lawmakers.

On Friday, Huawei executives acknowledged the mounting geopolitical challenges, while striking a tone of defiance. China’s semiconductor industry has gone through a “continuous stream of sanctions,” said Eric Xu, the rotating chairman of Huawei, adding that “China’s semiconductor industry will not sit idly by, but will take efforts around self-saving, self-strengthening and self reliance.”

Article source: https://www.nytimes.com/2023/03/31/business/huawei-annual-earnings-2022.html