The U.S. government’s recent placement of Huawei Technologies Co. Ltd. of China and its 68 overseas affiliates on the Commerce Department’s Entity List is expected to take a steep financial toll on the Chinese telecom company during 2019.
According to various news outlets, the company’s founder and CEO Ren Zhengfei forecast the overall reduction in revenue for this year to be about $30 billion, mostly due to U.S. technology export restrictions and the ongoing trade dispute between China and the U.S.
Before the imposition of U.S. export controls, the Huawei chief executive expected an annual revenue of about $219 billion for 2019.
However, Ren added, “I don’t think this will stop us moving forward.”
In mid-May, President Donald Trump issued an executive order aimed at preventing foreign companies from gaining access to certain U.S.-made technologies that could pose a threat to national security.
The Commerce Department responded by adding Huawei Technologies Co. Ltd. and its affiliates to the Entity List, which is enforced by the Bureau of Industry and Security.
The Entity List subjects U.S. exporters to specific export licensing requirements and prohibitions. Organizations or persons who violate U.S. export control rules — as defined under the Export Administration Regulations — are subject to criminal penalties and administrative sanctions.