What next for China’s Huawei with Trump upping the ante and the Covid-19 crisis gripping the world?

In the final instalment of an eight-part series on Huawei, we examine what 2020 may hold for the China telecoms giant as the global health crisis adds to US pressure

Founder and CEO Ren Zhengfei remains optimistic and says pandemic’s impact is driving new demand for digital services and connectivity

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Huawei's main challenges in 2020 will include dealing with US restrictions and the effects of the Covid-19 health crisis. Illustration: Perry Tse

Published: 12:00pm, 30 Apr 2020Updated: 11:57am, 12 May 2020

If Huawei Technologies had a difficult 2019 with the US scaling up pressure on its global business, 2020 could turn out to be even tougher with the coronavirus adding fuel to the fire.

Last month, the world’s biggest maker of telecoms equipment reported that revenue grew 19 per cent year-on-year to a record 858.8 billion yuan (US$121 billion) in 2019 – underlining its resilience in the face of multiple challenges – but warned that the Trump administration’s curbs on its ability to do business outside China were beginning to bite.

“Despite enormous outside pressure … business remains solid,” said Eric Xu, Huawei’s rotating chairman at the time, in the earnings statement, before adding that the “external environment will only get more complicated going forward”.

The Shenzhen-based company’s 2019 sales were driven by a jump in smartphone shipments in China and robust demand for its next generation 5G mobile networks. However, those numbers reflect the past 12 months and not the year ahead, when the impact of Huawei not being able to buy US-origin technology and pandemic-related uncertainties are both expected to hit the bottom line.

Huawei recently said that revenue growth slowed sharply in the first quarter to a slight 1.4 per cent, without breaking out numbers for each of its main business divisions – consumer, carrier and enterprise services. According to research firm IDC, global smartphone shipments are expected to drop 10.6 per cent year on year in the first half of 2020 due to the pandemic.

“If the coronavirus cannot be brought under control in Europe by the first half, Huawei’s carrier business will be hurt due to the delay of local internet construction,” said Jia Mo, an analyst at research firm Canalys. “In terms of smartphones, Huawei’s overseas business will be hurt badly without Google mobile services while the virus limits domestic demand.”

SCMP Series

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