Canada Markets closed

Huawei CEO Ren Zhengfei: 'Shutting Huawei out is the start of the US falling behind'

Krystal Hu
Reporter

SHENZHEN, CHINA — In an exclusive interview, Ren Zhengfei, founder and CEO of Huawei, spoke out about the Trump administration’s move to target the Chinese tech giant and emphasized that it does not need U.S. companies in order to survive.

The wide-ranging interview with Yahoo Finance covered the impact of the Trump administration’s previous ban on U.S. companies from selling components to Huawei, whether Huawei poses a security risk to the U.S., and recent setbacks at Huawei’s U.S. research arm, Futurewei.

Despite those hurdles, Ren insisted, “If U.S, companies were to stop supplying us altogether, our production would not stop for a single day in the future. Rather, we would ramp up production. There's no lethal risk that threatens Huawei's survival at all.”

The CEO spoke to Yahoo Finance in his first video interview since last month’s G20 summit, when President Donald Trump walked back his decision to ban U.S. companies from selling equipment to Huawei.

Impact of the entity list

On May 16, in a surprising move to some, the U.S. put Huawei on the so-called Entity List, effectively banning the Shenzhen-based firm from doing business with any U.S. companies. In addition to being the world’s biggest smartphone maker, Huawei also sells telecommunications equipment. After Trump put Huawei on the Entity List, Intel and Qualcomm couldn’t sell chipsets to Huawei, and Google’s Android system couldn’t provide updates to Huawei smartphones.

Speaking to Yahoo Finance, Ren acknowledged the company wasn’t fully prepared for being added to the list. Due to concerns about operating system updates, some markets saw Huawei smartphone sales fell as much as 40% in the first two weeks following the ban, according to Huawei executives.

However, after a review, Ren said, Huawei found it’s fully capable of shaking off its reliance on the U.S. for core products, and decided to cut some non-core products that depend on U.S. components.

One month following the initial ban, Trump softened his tone on Huawei after meeting with China’s President Xi Jinping at the G20 meeting in Japan. Since then, small- and medium-sized enterprises in the U.S. have started to ship to Huawei, according to Ren.

“The remarks made by Trump at the G20 Summit have had no substantial impact on Huawei yet,” Ren told Yahoo Finance. “The supply of the vast majority of less critical components has resumed. But the U.S. has not made any decisions on the supply of critical components yet.”

Another centerpiece of the U.S. government's concerns about Huawei is fifth-generation cellular network technology, or 5G. Huawei’s 5G technology is self-reliant, according to the company, which means it won’t be affected by any U.S. actions. “The more advanced a product is, the fewer risks we face,” Ren said.

Ren also for the first time confirmed layoffs in Futurewei, the U.S.-based research and development subsidiary Huawei was planning to invest $600 million in this year. Due to the entity list, Futurewei can’t send any of their R&D results to Huawei and no employees of Futurewei are allowed to have any contact with Huawei employees.

“This makes it difficult for us to manage this company and collaborate with them,” Ren said. “Now we cannot make further investment because we are not allowed to engage with Futurewei employees. What is our next step? This depends on the U.S. government's direction.”

“Trump has nothing on us”

Huawei equipment and devices have long been considered as a security risk by U.S. lawmakers, but the Trump administration has targeted the company in an unusual way—by not just limiting its business in the U.S., but also trying to persuade its allies to join the battle to isolate the Chinese company.

This, to Ren, is the U.S. trying to contain Huawei’s advanced technology. Ren, who follows Trump’s tweets, said the president’s stance has changed since the Justice Department filed criminal charges in January accusing the tech giant of stealing trade secrets and violating U.S. sanctions on Iran.

“The U.S. is a country ruled by law, how do legal issues allow negotiations? The law issues should be resolved in courts, right?” Ren asked.

Huawei has filed numerous lawsuits against the U.S. government since its CFO, Meng Wanzhou, was arrested in Canada last November. However, Ren doesn’t believe Huawei poses a security threat to the U.S. “We don't have any networks in the U.S., nor do we intend to sell our 5G products there anyway,” Ren said. “Trump has nothing on us, and he hopes to use Huawei as a bargaining chip, but China doesn’t seem to buy it, right?”

The company, which has repeatedly denied any ties with the Chinese government and military, said it won't ask the Chinese government for help. Instead, it’s trying to distance itself from the ongoing trade negotiation.

“If we got involved, the Chinese government would have to make concessions for us. Why should China make concessions for Huawei?” Ren said. “Huawei didn't commit any crimes, so why should they have to save us?

“Huawei is far ahead of U.S. companies”

Ren praised the U.S. while speaking to Yahoo Finance and told stories of how the American entrepreneurial spirit inspired him to build his company. In the hour-long interview, he reiterated his trust in the legal system in the U.S. and hopes to resolve the issues Huawei faces in courts.

But he also believes his company is ahead of its U.S. peers in new technologies and key areas like 5G.

“Although the U.S. is very strong, it hasn't developed all these technologies yet, so they have decided to pick on us by focusing on some insignificant issues,” Ren said. “In 5G, America doesn’t have many cutting-edge chips, Huawei is the sole provider of many cutting-edge chips. Our optical chips are the most advanced in the world. We can live without U.S. suppliers in many areas, but this is not what we want.”

Huawei has been the crown jewel in China’s technological advancement in the past two decades, and its own development is in line with what Beijing promotes as self-reliance in key tech areas. Now, it dominates the 5G space with over 50 commercial contracts, the most among all the major equipment makers. Due to national security concerns, U.S. carriers have been working work with firms like Nokia.

Ren said the future of the internet of things, or IoT, involves supercomputers, super-large-scale storage, and super-fast connections. He believes the U.S. is losing 5G connections by banning Huawei.

“Even if they have supercomputers and super-large-capacity connections, the U.S. might still fall behind because they don't have super-fast connections,” Ren said. “Shutting Huawei out is the start of the U.S. falling behind.”

More from Yahoo Finance’s exclusive interview:

Huawei exec: ‘Google is still trying to supply to Huawei’

Krystal Hu covers technology and China for Yahoo Finance. Follow her on Twitter.

Read more: