Huawei Blacklisting Is Forcing 'Extensive Layoffs' In U.S., Reports

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Huawei Blacklisting Is Forcing 'Extensive Layoffs' In U.S., Reports

 

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Last month, Huawei reportedly separated the operations of its U.S. research and development facility—Futurewei Technologies—as it continued to react to the implications of its U.S. blacklisting. "Futurewei had banned Huawei employees from its offices, moved Futurewei employees to a new IT system and forbidden them from using the Huawei name or logo in communications," said the South China Morning Post.

 

If the separation was intended to stave off more drastic action it hasn't worked. According to a Saturday (July 14) report in the Wall Street Journal, Huawei has now started to layoff staff in the U.S. R&D arm, as the company "continues to struggle with its American blacklisting." The division employees more than 850 people in Texas (the company's U.S. home state), Silicon Valley and Washington State.

 

Futurewei found itself on the frontline as its parent company battled the U.S. blacklisting that came into effect in May. And while the latest developments have seen a softening of restrictions on the more generic side of Huawei—essentially consumer products, core links with American universities and research bodies remain contentious.

 

"The exact number of layoffs couldn't be determined," reported the WSJ, "but one of the [inside] people said they were expected to be in the hundreds. Some of Huawei’s Chinese employees in the U.S. were being given the option of returning home and staying with the company, another person said."

 

Huawei and Futurewei are not separate entities, and the SCMP cited one inside source telling the newspaper that "Futurewei’s operations had been largely indistinguishable from Huawei—Futurewei had no separate brand or even a website... and its staff often identified themselves as Huawei employees."

 

Huawei prides itself on its patents, and last year filed more than any other organization around the world. Recently, the company has taken steps to more aggressively monetize those patents, especially where U.S. counterparties are concerned. Futurewei is part of that patent machine, and according to the U.S. Patent and Trademark Office has filed more than 2,000 of its own.

 

Last week, U.S. Commerce Secretary Wilbur Ross confirmed the blacklist reprieve for Huawei and its U.S. supply chain, announcing at a departmental event that “to implement the president’s G20 summit directive two weeks ago, Commerce will issue licenses where there is no threat to U.S. national security."

 

Huawei chairman Liang Hua told reporters on Friday (July 12) that the company had managed to ride out the blacklist thus far, with first-half revenues (to June 30) up—albeit no actual numbers were shared. But Liang also told reporters that the U.S. should go further than just a partial reprieve. Adding Huawei to the Entity List," he said, "was neither justified nor fair. It is not enough to ease restrictions on some U.S. suppliers. We should be removed from the list entirely."

 

For Futurewei, the challenge is that research links go to the heart of the U.S. backlash, with U.S. research institutions gradually backing away. MIT made headlines in April when it announced through a public letter that it would "not be accepting new engagements or renewing existing ones with Huawei... due to federal investigations."

 

Clearly all this relates to the overriding U.S. allegation that Huawei is linked to the Chinese state, and "one can never be sure of the true links in terms of government and large firms, especially in countries with opaque governance structures," Professor Michael Jacobides from the London Business School told me, acknowledging that "when the government has such a strong arm as it does in China, such concerns are understandable." 

 

There are no numbers on redundancies as yet, nor has there been any official statement from the company. I reached out to its U.S. communications team but there was no immediate response.

 

 

Source: Huawei Blacklisting Is Forcing 'Extensive Layoffs' In U.S., Reports

[Matrix]

Huawei lays off over 600 workers from its Futurewei subsidiary in the U.S.

The trade war has essentially frozen the research arm

 

 

 

In brief: The Chinese telecom giant has been having a hard time running its U.S.-based research arm after being blacklisted by the Commerce Department, so it's now letting go of hundreds of employees that were an important part of its efforts to stay ahead in the 5G race.

Huawei is cutting the jobs of more than 600 people from its Futurewei research arm in the U.S., confirming an earlier report. The company made it official on Monday when it sent an email to more than two thirds of the division's workforce, explaining that the layoffs -- effective July 22 -- come as a result of the U.S. blacklisting that saw 68 of its other subsidiaries placed on the infamous "entity list."

Futurewei, which has offices in California, Texas, Illinois and Washington State, employed 850 people that were responsible with developing and patenting technologies for its parent company who poured $510 million last year into the efforts. Once the Trump order went into effect, the research arm became unable to export its work back to China, effectively coming to a standstill.

Reuters got word from one of the employees not affected by the layoffs that Huawei asked people who worked at Futurewei to beam all data back to its Chinese servers the day before the ban came into effect. Prior to that, they served a key role in securing over 2,100 patents related in part to 5G and camera technology. On a positive note, the Chinese telecom giant promised to offer severance packages to those who saw their jobs cut.

The U.S.-China trade war is having a great impact on Huawei's business, and while American companies are using a loophole to circumvent the ban, the company's struggle is far from over. Its smartphone business has been showing signs of slowing growth, and since its Android alternative isn't really a mobile OS, its future remains uncertain.

On Monday, President Trump said he would award U.S. companies licensing deals with Huawei in a timely manner, so there's still hope for the remaining 1,200 people involved with the company's local supply chain and customer support.

 

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