Abu Dhabi, UAEMonday 19 August 2019

With brave face, Huawei founder dismisses US threats and pledges support to Apple

The Chinese company imports nearly half of the chips used in its equipment from the US

Ren Zhengfei, founder and chief executive of Shenzhen-headquartered Huawei remains defiant in face of mounting US pressure. Bloomberg
Ren Zhengfei, founder and chief executive of Shenzhen-headquartered Huawei remains defiant in face of mounting US pressure. Bloomberg

Unfazed by US attempts to stem Huawei’s growth, its founder has defended the company’s technological prowess and vowed to carry on with its contingency plans.

Ren Zhengfei, who is also the chief executive of the company, said: “We will review the situation again and fix problems. We might have contingency plans for the core of the aeroplane - the engine and the fuel tank - but we may not have plans for the wings.”

On May 17, Washington placed Huawei on a commerce blacklist, barring US companies from doing business with China's biggest technology firm. The Trump administration accuses Huawei of aiding Beijing in espionage, a claim the company denies.

Mr Ren, who served as a technologist in the People’s Liberation Army of China during the early days of his career, said Huawei was being singled out because it is technologically superior to the US and Washington is trying to scuttle its progress.

“We are leading the US … if we were behind, Trump wouldn’t need to make so many efforts to attack us," he told Bloomberg. "If US imposes restrictions on us, we will reduce our purchases from US and use more of our own chips.”

Huawei-made equipment is expected to be used on a large scale when the fifth-generation – 5G – wireless network comes online, powering everything from self-driving cars to the Internet of Things. Huawei is importing nearly half of the chips used in its equipment from the US companies, Mr Ren said.

"[The] US has not developed that technology. It is more likely that they stole our technology,” Mr Ren said in response to intellectual property theft allegations against the company.

Sean Quek, head of equity research at Bank of Singapore, told The National the stand-off with Huawei "could weigh on US tech firms in the near-term while negotiations drag on, and perhaps longer if no deal is reached soon".

As the third-largest buyer of semiconductors in the world, according to Gartner, barring Huawei from buying from US manufacturers would impede the earnings of US tech companies as uncertainty grows about demand and future production, leading to weaker orders, Mr Sean said.

“China is also a significant market for US tech firms’ end products. Slower economic growth in China as a result of the escalating trade dispute could also weigh on demand for these US firms. Both economies are highly dependent on each other and a knock-on effect is inevitable.”

Mr Ren, however, said he is against targeting American technology giant Apple as retaliation against US curbs on Huawei and said if that happened, he will be the first to "protest".

“Apple is my teacher. It's advancing in front of us. As a student, why should I oppose my teacher … I will never do that. Apple is the world’s leading company. If there was no Apple there would be no mobile internet.”

Mr Ren admitted the US backlash would result in a dip in earnings but it will not affect its business with other countries.

“We might miss our expected growth targets but we will grow … being able to grow in the toughest battle environment reflects how great we are.”

The US is not an international police, said Mr Ren. “The rest of the world will decide whether they should work with us based on their own business interests,” he added.

Huawei's first quarter smartphone shipments grew 50 per cent year-on-year, overtaking Apple to claim the No 2 spot in the industry, according to research company International Data Corporation.

Mr Ren said his company is not interested in the race of overtaking the competitors. “We can become bigger or smaller, he said. "We are not a public company, we are not only pursuing growth or profits … it is good enough for us to just survive.”

Updated: May 27, 2019 05:16 PM

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