China’s Huawei Technologies said its main target is survival as it warned that the world is entering a long recession that will leave its marginal businesses shuttered and everyone feeling ”the chill.”
That was the message founder Ren Zhengfei gave to employees in an email yesterday, according to reports in Chinese media.
The company’s strategy must shift from the pursuit of scale to the pursuit of profit and cash flow to survive ”the crisis of the next three years,” which will shrink global consumption, Ren said, according to the reports.
“With survival the main principle, marginal businesses will be shrunk and closed, and the chill will be felt by everyone,” he said, “First of all, you must survive, and if you survive, you will have a future.”
Ren did not explain which businesses were “marginal” but said the company must focus on its core information and communications technology (ICT) businesses.
“We must be clear that building ICT infrastructure is Huawei’s historical mission, and the more difficult the times are, the more we cannot waver,” he said.
Huawei said the email was for employees and declined to comment further.
Big Drop in First-Half Profit
The United States put Huawei on an export blacklist in 2019 that barred it from accessing critical technology of US origin, hurting its ability to design chips and source components from outside vendors. The United States says Huawei is a security risk, which the company has denied.
Huawei’s first-half results showed a 52% drop in profits to 15.08 billion yuan, according to calculations, with a weak economy, Covid-19 disruption and supply chain challenges hurting the company’s device business that sells smartphones and laptops.
Ren mentioned the company’s cloud computing, digital energy and smart car businesses as areas where the company should see development, according to the report.
Ren said the outlook for the company was uncertain beyond the next couple of years.
- Jim Pollard with Reuters