WHAT’S NEXT FOR HUAWEI? Huawei Bracing for Revenue Hit – By Todd Horwitz, Bubba Trading

 

Huawei founder and CEO Ren Zhengfei estimates the tech company’s revenue will be $30 billion less than forecast over the next two years due to the U.S. government’s ban and ongoing trade dispute with China.

“We never thought that the U.S.’s determination to attack Huawei would be so strong, so firm,” Ren said Monday during a panel discussion at company headquarters in Shenzhen. “…We cannot get components supply, cannot participate in many international organizations, cannot work closely with many universities, cannot use anything with U.S. components, and cannot even establish connection with networks that use such components.

“Ren said Huawei’s sales revenue for the next two years will be about $100 billion — down from the previous target he made in February of $125 billion in 2019. The tech giant brought in a revenue of about $105 billion last year. The CEO added that the company will reduce its capacity in the next two years.

U.S. companies also are feeling the sting of the restrictions against selling to Huawei. According to Huawei, the company spent around $11 billion on U.S. technologies last year. Chipmaker Broadcom expects the Huawei restrictions to reduce its revenue this year by $2 billion, the company said last week. According to Reuters, other chipmakers are lobbying the White House to loosen the restrictions. U.S. companies don’t have the sort of access to the Chinese market that they’d like. But losing access to Huawei means even fewer sales to the country.

Despite the setbacks, Ren said the company will still move forward with research and development and will not conduct massive layoffs. The tech giant will continue to collaborate with other companies and countries.



Todd “Bubba” Horwitz

IN ASSOCIATION WITH

Financial Markets and Political Commentary
 

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Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.