China's technology giant Huawei said on Friday that the impact of the U.S. trade sanctions against Huawei would be less severe than initially feared, but the sanctions could reduce smartphone revenue by about $10 billion this year.
Previously, the United States put the world's second-largest smartphone maker on the so-called physical list, threatening to cut off the U.S. supply of parts and technology to Huawei.
In June, Ren Zhengfei, Huawei's founder and chief executive, first assessed the impact of sanctions, said that Latin America's Huawei would reduce its revenue by $30 billion, so that it would not grow in 2019.
"Now it seems that the impact may be less than $30 billion, but the exact amount will not be known until next March when the results are released," Xu Zhijun, Huawei's rotating chairman, said at a press conference at Shenzhen headquarters to release a new AI chip.
Mr. Xu said Huawei's consumer business has performed much better this year than initially expected. The business unit, which includes the smartphone business, is speeding up the development of its own operating system to prepare for the worst - case scenario of no longer being able to use Google's Android applications.
"But there could be a reduction of more than $10 billion," he said. Huawei's consumer business reported revenue of 349 billion yuan in 2018.
Driven by promotional activities and patriotic enthusiasm, Huawei's smartphone sales in China in the second quarter increased by nearly a third to a record high over the same period last year, helping it completely offset the impact of declining global market sales. Huawei announced last month that its consumer business revenue in the first half of 2019 was 221 billion yuan.
The U.S. government said it would extend the 90-day moratorium on Huawei to allow the Chinese company to continue buying parts from American companies to supply existing customers. Meanwhile, the United States blacklisted more than 40 Huawei subsidiaries.
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