Market Overview

Huawei Reshuffles US-Linked Executives Amidst Reported Increase in Sales

Huawei Reshuffles US-Linked Executives Amidst Reported Increase in Sales

Chinese telecommunications giant Huawei has reportedly reduced the number of its personnel that has links to the U.S. in a bid to alleviate the risks of spied by U.S. agencies, Nikkei Asian Review reported, citing unnamed sources.

What Happened

Huawei, which is roughly translated as “China can make it,” has been caught in the middle of trade disputes between the U.S. and China. It has even been accused of being a spy for the Chinese government. Because of the concerns that Huawei poses a security risk, U.S. authorities have blocked the telecom giant’s attempts to acquire American tech companies a few times.

Back in 2008, the George Bush-led American government blocked Huawei’s attempt to complete a $2.2 billion acquisition American maker of internet router and networking equipment 3Com. The U.S. found Huawei’s ties to the Chinese military conflicting with 3Com’s work, which included making anti-hacking computer software for the U.S. military.

More recently, the U.S. government blocked a proposed $117 billion deal for the acquisition of American semiconductor company Qualcomm (NASDAQ: QCOM) by competitor Broadcom (NASDAQ: AVGO), which is also an American company. The Committee on Foreign Investment in the United States (CFIUS) recommended against sanctioning the deal. It believed Broadcom’s track record for cutting research spending strengthens the position of Huawei in the 5G wars.

Despite Huawei’s continual denial of the security allegations against it, President Donald Trump signed an executive order that effectively banned the Chinese company from acquiring components and technology from U.S. companies without prior U.S. government approval. The Trump administration has since extended the ban to include other Chinese entities.

Last week, the U.S. blacklisted 28 Chinese firms who were linked to the security surveillance controversy in the Chinese province of Xinjiang. Human rights groups report that Uighurs and members of other ethnic groups exceeding a million in number have been placed in detention camps as a result.

Hikvision and Dahua Technology, two of the world’s largest manufacturers of video surveillance equipment, were among the 28 entities banned from buying American products.

What It Means

Amidst the continued trade tension between the two largest economies in the world, Huawei has been reshuffling its personnel because the employment of highly-skilled staff with links to the U.S. might be considered a form of technology export, sources told Nikkei Asian Review.

Despite the U.S. ban, Huawei’s revenue for the first three quarters of this year rose 24.4% to CNY 610.8 billion (around $86 billion). The company’s smartphone shipments during the same period were up 25% year-over-year to reach 185 million units. While the company didn’t explicitly state what its third-quarter shipment figure was, estimates hinted that it shipped 67 million units during the third quarter, a 13.5% increase over the second quarter’s shipments of 59 million units.

Posted-In: News Rumors Global Economics Markets Media


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