Huawei CEO Ren Zhengfei admits US sanctions will cut revenues by $30bn

Zhengfei admits he underestimated potential impact of being placed on US 'Entity List'

Huawei founder and CEO Ren Zhengfei has admitted that US sanctions will hit his company harder than originally anticipated.

At a ‘Coffee with Ren' event today in Shenzhen, China Ren suggested that the action by the US government could knock as much as $30 billion off of the company's revenues this year and in 2020, compared to $105.2 billion the company posted in 2018.

"We cannot get components supply, cannot participate in many international organizations, cannot work closely with many universities, cannot use anything with US components, and cannot even establish connection with networks that use such components," Ren said, according to Reuters which had a reporter at the event.

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Ren admitted that he had underestimated the impact that being placed on the US ‘Entity List' last month, which requires its US suppliers to apply for licences before they can sell components to the networking hardware firm. The practical result of the move was the near-instant shutdown of cessation of business between Huawei and suppliers with ties to the US.

While President Trump rowed-back a little with a 90-day stay of execution for Huawei, the company will still struggle to find suitable replacements for goods and services provided by companies such as Intel, AMD, Qualcomm, Google, ARM and Microsoft in the time available.

"We did not expect they would attack us on so many aspects," Zhengfei added.

In addition to the impact on the company's core networking hardware products, the company is also expecting international sales of smartphones, which rely on ARM-based microprocessors and networking chips from Qualcom, to be cut in half this year.

Noted Silicon Valley ‘gurus' George Gilder and Nicholas Negroponte also appeared at the event alongside Zhengfei. They were also critical of the US action, according to Reuters journalist Sijia Jiang.

"Our president has already said publicly that he would reconsider Huawei if we can make a trade deal. So clearly that is not about national security, we don't trade national security. So it is about something else. And this trade war has got to end," said Negroponte. Both Gilder and Negroponte claimed to be meeting Zhengfei for the first time.

Gilder added that the US was making "a terrible mistake" and suggested that Huawei could help solve the problem of a "catastrophically insecure internet architecture".

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