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Huawei has faced significant challenges over the past few years due to stringent US sanctions. Its smartphone sales have nosedived while the company also lost business in other tech industries. The beleaguered Chinese firm’s senior executive Richard Yu Chengdong recently got candid about the situation, sharing insights into the “incredibly difficult” days that Huawei endured.
Huawei executive discusses its fall and fight for survival after US sanctions
In May 2019, the US government placed Huawei on its Entity List, effectively blocking its access to all modern technologies originating from the US or developed using US-origin equipment over the next few years. The company could no longer do business with any American firm. It couldn’t use Qualcomm’s most advanced smartphone chipsets and Google Mobile Services (GMS) on its Android phones, among other things.
The sanctions have seen several reforms over the years, with the US government also allowing special export licenses to some companies. These licenses enabled Huawei to remain afloat in the smartphone industry, but only just. With no GMS and powerful 5G chipsets, it couldn’t compete in the global market. From selling over 240 million phones in 2019 to just 28 million in 2022, the Chinese firm experienced an unimaginable fall.
In a live-streamed interview with Chinese influencer Dong Yuhui earlier this week, Richard Yu Chengdong, Huawei’s chairman of the consumer business group, discussed the effects of the US sanctions. “My team wasn’t able to start operations,” the executive said. “As the global leader in 5G technology, we didn’t even have 5G [smartphones] ourselves. Our days were incredibly difficult,” the highly outspoken Yu added.
Known for his off-the-cuff comments that have earned him the nickname”Big Mouth Yu” on Chinese online platforms, Yu was a driving force behind Huawei’s success before the US sanctions started showing their effects. The firm overtook Samsung to become the world’s largest smartphone vendor in the second quarter of 2020. That was its peak moment in the pre-Entity List era. It is starting to grow again, but those heights are now a distant dream.
The US government is tightening its restrictions on the firm
After hitting rock bottom between 2020 and 2022, Huawei started emerging from the ashes in 2023. Backed by a robust domestic supply chain, it launched its first 5G phone in over three years. The firm hasn’t looked back since and is now on track to ship over 50 million smartphones in its home country this year. It is expected to emerge as the biggest smartphone vendor in mainland China with a market share of 19%.
Since Huawei is using home-grown technology, Chinese people are increasingly buying its products. “Huawei smartphones use domestically made chips instead of integrating Western chips, so our users are also making a contribution to the rise of China’s electronics supply chain,” Yu said during the interview. The company recently constructed a $15 billion R&D center to work on semiconductors, wireless networks, and IoT (Internet of Things).
In the meantime, the US government is tightening its restrictions on the Chinese firm. The Biden administration recently revoked eight special export licenses. Intel and Qualcomm are among the companies that have lost Huawei’s export licenses. This move may hinder the firm’s progress but if we look back at its path over the past three or four years, US trade restrictions may no longer affect Huawei as much as they did in the past.
Huawei might soon be back on the global scene, riding on a domestic supply chain. As they say, you cannot contain technology. The other company will figure it out sooner or later. Rumors say it will launch the world’s first tri-fold foldable smartphone. Time will tell whether this device will have a global launch.