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Huawei expects 2021 revenue to drop by 28.9% as sanctions drag on

Huawei expects 2021 revenue to drop by 28.9% as sanctions drag on

Chinese telecommunications giant Huawei said Friday it expects revenue for this year will come in at 634 billion yuan ($99 billion), a 28.9% drop from a year ago.

The company has suffered from U.S. sanctions, the semiconductor shortage and a global slump in demand for smartphones.

The full-year estimate for 2021 indicates Huawei’s revenue for the second half of the year declined from that of the first six months to 313.6 billion yuan, from 320.4 billion yuan.

The company reported 891.4 billion yuan in revenue in 2020, up 3.8% from the previous year. That’s far slower than the 19.1% year-on-year increase reported for 2019, with revenue of 858.8 billion yuan.

Friday’s release came as part of an internal New Year’s message from Huawei Rotating Chairman Guo Ping, who focused on rallying employees to press on.

The letter did not specify reasons for the drop in expected revenue, but noted “serious challenges” from “an unpredictable business environment, the politicization of technology, and a growing deglobalization movement,” according to an English-language version seen by CNBC.

Guo added that “this past year, our carrier business remained stable, our enterprise business experienced solid growth, and our device business expanded swiftly into new business domains.”

For next year, Guo said the company’s aims include increasing efforts to build up and attract talent, and developing automotive-related technologies.

Last week, Huawei announced the first electric car with its HarmonyOS operating system would likely begin deliveries in late February.

Huawei typically releases its more detailed annual report in March.

Figures released for the first half of 2021 showed the two largest business segments, consumer and carrier, saw sharp year-on-year declines. The far smaller enterprise business, which has become central to Huawei’s growth strategy, grew by 6.6 billion yuan.

In 2019, former President Donald Trump’s administration put Huawei on a blacklist that restricted American companies from selling technology to the Chinese company, citing national security concerns. Huawei has denied it poses such a threat.

While those restrictions haven’t eased, other tensions between Huawei and the U.S. government have.

CFO Meng Wanzhou, daughter of founder Ren Zhengfei, returned to work at the company’s headquarters in Shenzhen this fall after reaching an agreement with the U.S. government regarding wire fraud charges.

Meng had fought extradition to the U.S. from Vancouver, where she was arrested in December 2018. She spent most of the last three years under house arrest, in which her 10 million Canadian dollar ($7.9 million) bail conditions allowed her to venture out during the day with security tracking.

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