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Huawei Shrugs Off U.S. clampdown with a $100 Billion Year
Published on: 2019-05-08
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031Huawei announced sizable earnings as the United States government cracks down on the company.

These are not carefree days for Huawei, the Chinese tech behemoth. The United States is trying to persuade the world not to use the company’s equipment in cellular networks. The Justice Department has charged the firm and its chief financial officer with bank fraud and theft of trade secrets. Yet Huawei’s business is soaring. And the company’s leaders sound confident that Washington can do little to stop it from flying higher. Huawei earned more than $105 billion in revenue last year, up nearly a fifth from 2017, Guo Ping, the company’s deputy chairman, said on Friday. Profit grew by a quarter, to more than $8 billion. Though Huawei has not sold shares to the public, it publishes audited yearly financial results as a gesture toward openness. Speaking at the company’s headquarters in the southern Chinese city of Shenzhen, Mr. Guo said that “we will do everything we can to shake off outside distractions, improve management and make progress toward our strategic goals.”

033034036In telecommunications equipment, smartphones and more, Huawei has become a globe-straddling colossus despite years of accusations by the United States that the company acts and spies on behalf of the Chinese government. Huawei today is in the same league, in terms of yearly revenue, as Microsoft and Google. By that metric, it is almost as big as three of China’s most influential internet companies - Alibaba, Tencent and Baidu - combined. For much of the past year, though, Huawei has battled a torrent of legal and regulatory troubles. In December, the company’s finance chief, Meng Wanzhou, was arrested in Canada after the United States accused her of defrauding Huawei’s banks and causing them to violate sanctions against Iran. Ms. Meng - who is the daughter of Huawei’s founder and chief executive, Ren Zhengfei - remains in Canada while legal authorities decide whether she will be extradited.

032The other big unknown on Huawei’s horizon is whether Washington will take further measures to undermine the company. The Justice Department has already filed criminal charges against Huawei and Ms. Meng. But other federal agencies could do more, such as cut the company off from American parts and technology. The American chip companies Broadcom and Xilinx, both of which count Huawei as a customer, have recently told investors that they are monitoring the situation closely. The immense power that Washington wields over Chinese tech companies was on vivid display last year when the Commerce Department nearly drove a smaller telecom equipment maker, ZTE, out of business by denying it access to American components. Commerce officials determined that the company had illegally exported American-sourced technology to Iran. An American company, Micron Technology, has accused Jinhua of stealing chip designs. Kevin J. Wolf, a partner at the law firm Akin Gump Strauss Hauer & Feld, was an assistant secretary of commerce during the Obama administration. He oversaw the first phase of the Commerce Department’s case against ZTE. It is extremely difficult, he said, to predict what more might be done to Huawei. The law gives officials wide berth to decide how to protect national security. “The standard is so broad,” Mr. Wolf said. “It’s up to whoever’s in charge to determine what a national security concern is.”

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