The effects of the US ban on goods from China has already been felt by multinational telecom giant, Huawei Technologies as it is reportedly planning for extensive job cuts for its US operations.
On July 14, the Wall Street Journal reported that Huawei will conduct a large-scale layoff of its employees in its US subsidiary, Futurewei Technologies. The research-and-development subsidiary employs around 850 people at its labs in California, Texas, and Washington. According to the Journal, “the company’s international smartphone sales fell 40% in the month after the blacklisting was announced” and as a result, hundreds of people might lose their jobs due to the significant drop in revenue.
Ren Zhengfei, the Chinese telecom’s CEO, predicts that the US ban has slashed around $30 billion in global sales. The revenue slump has forced Huawei to plan a massive layoff that will impact jobs in the US. There were also speculations that affected Chinese employees will be offered jobs if they opt to return to China and stay with the company.
On the other hand, Roth Capital Partners announced in June 2019 that Huawei made an exit from the solar inverter market as it shuts down its US operations and lays off all of its employees. Those who are non-US citizens were transferred out of the US. Huawei has been regarded as one of the largest inverter manufacturers with a 22% share of the global market but only a 4% share in the US market.
It was in May when US President Donald Trump signed an executive order that blacklisted the Chinese telecom due to national security concerns, preventing it from doing business in the US. The US President accused Huawei of collaborating with the Chinese military and government in spying against the US.
The CIA even cited that the telecom is funded by Chinese state security. It was a sad fate that the largest telecom supplier was caught in the trade war between China and the US. The ban came after Huawei was celebrating a 50% increase in smartphone sales.
Huawei took several beatings after the American blacklisting. Google has blocked Huawei smartphones for future updates with their Play Store while Microsoft has stopped selling Huawei laptops. Several companies from US allies backed out from its planned 5G rollout.
UK chip designer, Arm, dropped the smartphone manufacturer and halted making new chips for Huawei’s mobile devices. These and more banishments have given Huawei pariah status in the telecom industry in several countries.
The Chinese telecom was quick to respond to these challenges. A few days after the ban, it filed a motion before the US court to lift the ban. It has been reported that it is developing its own Android operating system called “Ark/Hongmeng” that was recently renamed Harmony and will be Huawei’s proprietary program.
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Later last June, the US president lifted some restrictions it imposed against Huawei. This move was made to resume trade talks with China after Trump met with Chinese President Xi Jinping during a G20 meeting. The exemption was only limited to sales of equipment that does not pose any threat to national security.