UPDATED 22:19 EDT / AUGUST 20 2019

huawei POLICY

In the face of US bans, Huawei CEO says company experiencing a ‘live-or-die moment’

Huawei Chief Executive Officer Ren Zhengfei has written a new internal memo to staff in response to the latest U.S. exports curbs, describing the company as experiencing a “live-or-die moment.”

The memo, a follow up to his internal memo earlier this month that called for a three- to five-year overhaul of Huawei to create an “iron army” further detailed proposed changes to the company to assist it in surviving if access to U.S. technology is cut off.

Keeping with his use of colorful metaphors, some of which hark back to China’s Cultural and Communist Revolutions, Zhengfei called on underused employees to form “commando squads” to explore new projects, in which case they would be promoted to company commander if they do well, according to a report from Bloomberg today. Those that fail to find a new role would have their salaries cut every three months until they do the memo added.

“The company is facing a live-or-die moment,” Zhengfei is quoted as saying. “If you cannot do the job, then make way for our tank to roll; And if you want to come on the battlefield, you can tie a rope around the ‘tank’ to pull it along, everyone needs this sort of determination!”

The memo comes after Huawei received another 90-day reprieve from the U.S. Commerce Department on a ban on accessing U.S. technology first announced earlier this year. The ban, if and when it comes into full force, includes access to chips made by Qualcomm Inc. and Google LLC’s Android operating system.

Complicating the ban further, the Commerce Department has extended the ban to an additional 46 Huawei-affiliated companies. More than 100 Huawei affiliates, from countries including Argentina, Australia, Belarus, China, Costa Rica, France, India, Italy and Mexico will be banned from dealing with U.S. firms once the latest 90-day reprieve expires, presuming that a new 90-day reprieve isn’t granted or that the U.S. and China come to an agreement in its ongoing trade war.

Zhengfei wasn’t all downbeat and militarist in his language, however, noting that Huawei saw a 23% increase in revenue during the first half of the year.

“In the first half, our results looked good, it is likely because our Chinese clients were sympathetic and made payments in time, the big volume made cash flow look good, this doesn’t represent the real situation,” Zhengfei said.

Much of that demand was domestic with sales of Huawei smartphones in China surging 31% in the second quarter off a swell of patriotism driven by the company being specifically targeted by the U.S. Many of those sales came at the expense of Apple Inc., which continues to lose market share in the Middle Kingdom.

Photo: Duncan Riley

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