TAIPEI (Taiwan News) — Chinese telecoms giant Huawei has alerted its suppliers that its smartphone component orders for this year will be cut by more than 60 percent as it continues to struggle with U.S. sanctions.
According to Nikkei Asia, who talked to sources at multiple suppliers, Huawei says it intends to order components for roughly 70 to 80 million smartphones this year. This represents a more than 60 percent plunge from the 189 million smartphones the Chinese company shipped in 2020.
Huawei’s orders have been limited to components for 4G models because it does not have U.S. government permission to import components for its 5G models, per the report. Some suppliers even told Nikkei that the number of phones produced could be as low as 50 million units.
Although some Huawei suppliers have received licenses from the U.S. Department of Commerce to ship components, the Chinese firm still lacks access to key parts for its 5G phones.
The Department of Commerce first added Huawei to its Entity List in May of 2019, requiring its American suppliers to first obtain government approval to ship to the Chinese company. In May 2020, restrictions were expanded to include non-U.S. manufacturers from assembling any products for Huawei if they used American equipment. In August 2020, Washington tightened sanctions by restricting all suppliers using U.S. technologies from doing business with Huawei without a license.
Some in China had hoped that with the change of administration in the U.S. from Trump to Biden, Huawei would receive some reprieve; however, President Biden’s Commerce Department secretary nominee Gina Raimondo said on Feb. 4 that she sees no reason to remove blacklisted companies from the Entity List because most were placed on it for national security reasons or foreign policy interests.