On Sunday, the Wall Street Journal reported that Huawei is planning to initiate mass layoffs in its U.S. workforce. The publication notes that the controversial Chinese electronics company will reduce staff at its Futurewei Technologies subsidiary. According to Reuters, the Santa Clara-based research and development firm employs around 850 people.
While Huawei hasn’t commented on the matter, the Journal reports that the corporation intends to let go of hundreds of workers. The Journal also notes that some Futurewei employees were already told they are being let go. But the company is planning even more layoffs. As a recourse, the electronics giant has reportedly given its Chinese workers the option to stay with the company if they are willing to repatriate.
Too Little, Too Late
Huawei’s reported staff reduction comes at an incredibly tumultuous time in the corporation’s history. For months, the U.S. government has alleged that the conglomerate is an organ of the Chinese government. Furthermore, in May, Washington put the company on a blacklist that forced American companies to break their agreements with the Sino organization. However, things seemed to get better earlier this month, following the latest G20 summit.
After the conference, President Trump said that the U.S. Department of Commerce would start issuing licenses allowing U.S. corporations to trade with Huawei once again. Though the government declined to remove the company from its entities list, Trump’s statement represented a major positive development.
The government’s new perspective also offered hope to the struggling American semiconductor sector. Notably, Huawei bought $11 billion in U.S. components last year. But the Chinese conglomerate’s decision to slash its labor force suggests that Washington’s concessions aren’t enough to mitigate the economic damage it has sustained.
Last month, Huawei CEO Ren Zhengfei said his company would lose $30 billion through 2020 because of the U.S. blacklist.
Struggling to Cope
Despite its recent issues, Huawei is striving to maintain its position as one of the world’s largest electronics companies. Last week, the firm revealed that it would release its first 5G device in select markets later this month. The company will launch the Mate 20 X 5G in Italy on July 22, the United Arab Emirates on July 12, and China on July 22.
The corporation planned to release the phone in the United Kingdom in June. However, local carriers EE and Vodafone indefinitely delayed its launch.
The conglomerate is also making headway in the development of its own mobile operating system (OS). According to BGR, the firm has trademarked the names “Ark,” “Harmony,” and “Hongmeng” for use as a computer and mobile OS. Previously, Huawei used Google’s Android OS to power its mobile devices. But Washington’s blacklist prevents Google from selling licensing software to the Sino corporation for its forthcoming handsets.
While the company may be able to sustain its operations in the near term, its long-term prospects remain in doubt. Indeed, without U.S. chipsets or software, it’s hard to imagine how Huawei can continue to compete against the likes of Apple and Samsung.