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Huawei vows to return to the smartphone ‘throne’ despite U.S. sanctions crippling its business – CNBC

People wait to enter a Huawei flagship store on July 30, 2021 in Shanghai, China. Huawei launched P50 series smartphones in July.

VCG | Visual China Group | Getty Images

GUANGZHOU, China — A Huawei executive said the Chinese technology giant will return to the “throne” of the smartphone industry even as the company continues to suffer the fallout from U.S. sanctions.

Under the administration of former U.S. President Donald Trump, Huawei was dubbed a national security threat, put on an export blacklist and cut off from key technologies, namely advanced semiconductors needed for its smartphones.

Revenue from Huawei’s consumer division plunged 47% year-on-year in the first half of 2021. The company was once No. 1 in the smartphone market, but has since dropped out of the top five.

“The biggest difficulty for us at present is on mobile phones. We know that [to produce] phones with small size and low power consumption requires advanced technology. Huawei can do the design, but no one is able to help us to produce. We are stuck,” Huawei Chairman Guo Ping said in a Q&A with staff, according to a transcript seen by CNBC.

One of Huawei’s biggest issues is that Chinese chipmakers do not have the ability to make the cutting-edge semiconductors that the Shenzhen-headquartered company requires.

Guo said, however, Huawei will not exit the smartphone business. Instead, it will work with partners in order to improve their technology which will in turn benefit Huawei as it could get access to China-produced silicon.

“Huawei will keep its existence in mobile phone sector,” Guo said. “I expect that as the capability in chip manufacturing increases, [Huawei] will return to the smartphone throne.”

“I hope the day when China is able to make chips can come sooner. Until that day, the sector will exist, and we will try to retain and develop our technologies, to make sure we are able to make competitive phones,” Guo added.

Last year, Huawei sold off its budget smartphone brand called Honor, in a bid to keep the business alive.

Huawei has shifted its focus to areas such as software and cloud computing as the smartphone business continues to face headwinds.