Huawei Not Welcome in the U.S.

electric vehicles. They're really looking for growth in a lot of areas. We're very pleased to have back with us. Andy Purty, chief security officer at Huawei Technologies USA. Andy joining us once again via zoom from College Park, Maryland. Andy, how are you? But actually I'm in San Francisco conference. Good to have you with us at in San Francisco. Remind me why are you there the rs A Security conferences this week? Perfect? There it is. What are the

big topics that are at the RSA Security Conference? Now that's back in person. There's a lot about zero trust, technological innovation, cypelucurity, risk, cloud. I mean, it's just everything is covered. Well, I've been at that event. Yeah, it's

really fascinating. I do feel like, uh Andy, certainly when we talk with CEOs of companies, and we've we've found this when we were at at Milkin on the West Coast, is that when it comes to if companies have to rain in spending at all, depending on the economic environment, they're not necessarily going to do it when it comes to tech, and certainly not when it's tech related to security. Uh the spend is on. Tell me a little bit

about your outlook. Um, we know that last time around in terms of earnings, it was a little tricky for you guys. What are you seeing. I think your profit was down about sixty seven. I know a lot of it has to do with US sanctions against you guys. What's what's business look like right now? And what's the outlook? Well, well, certain of the components that we haven't been able to get have dramatically hurt our five G mobile phone business. But in the other areas we have been holding our

own in terms of our five G networks. Our enterprise business has done tremendously well with digitalization that's really transforming business. We've been selected by two hundred and sixty seven of the global Fortune five companies to do their transformation, and we've had great success in terms of what we call the seamless AI life experience with mobile devices, wireless handhelds, those kinds of things. We're making a big difference, and frankly,

it's given the challenge of moving forward. We've made a gigantic investment in R and D, up from ten percent of revenue to we spent twenty two billion last year in R and D. We're making great progress with it. How much would you characterize these sanctions placed by the United States are affecting the business? How much is it holding back from more companies in the essen in the fortune adopting your technology. Well, it's hard to it's hard

to say. Certainly. Our global revenues, for one, as you know, we're down like which is a dramatic cut down to just under a hundred billion dollars um. We have so many UH countries in the world that are interested in doing business with, so many companies that want to do business with our five g is is all over the world,

and we're having a great user experience. And frankly, what I'm encouraged by is that we are so open to collaborating with whoever, including the US government, private companies on some of this R and D that's going to be necessary to move from five G to five point five G. The connectivity that's going to be necessary will have to grow a hundredfold every year. So we have to push some of the scientific theories, and we'd love to collaborate with the experts around the world to do that well.

And what's interesting you talk about five G, but I have conversation after conversation about five G hasn't lived up to its expectations. We've done some reported here at Bloomberg. Uh, what signs do you have that that maybe is changing well in certain parts of the world where you have true five G Because as you know, it's not just about speed, it's also about latency, the lag time. It's

also about the number of connections. So moving toward an intelligent world, the five G enabled technologies are happening in great order in several countries of the world. So we're hopeing that we can share the experience, not that we would necessarily do the business in the United States, but make sure the American sectors understand that these technologies are available now and it's going to really help transform the companies.

That's going to help their competitiveness, and it's going to help the citizens of those countries to get involved in it. What hope do you have that President Biden, and let's get to kind of the elephant in the living room, that he will review those tariffs. He's talked about reviewing the tariffs imposed um on imports from China. That something will change. And I'm curious about the conversations that you are having with folks in Washington that anything significantly will

change on this front. Well, frankly, we are such a small player in this and the business even at its peak that we did in the United States was was

not a material thing. So when you look at the factors that are taking place with the Russian invasion of Ukraine, UH, COVID, other factors, you see the global community is concerned about changes in globalization because I think it was the I m F has said that global is nation in the last thirty years raised over a billion people out of poverty, and we just hit uh Washington Propost story said that we hit a record of twenty eight point five billion

of goods traded last year. So we're a small player. Globalization that has brought great benefits to the global community has to be careful. Let's not throw the baby out with the bathward. We have to reshape globalization and and so we're just a small player. We want to share information and collaborate, particularly on things like cybersecurity and innovation

and some of these hard scientific problems. But we're just open and we just want to try to do business where where we're welcome, And we're welcoming an awful lot of places. But do you feel like, Okay, you're welcoming a lot of places. Do you anticipate that you'll be welcome back, small player or not in the US market anytime soon. No, I certainly don't think we'll be welcomed

back in the US anytime soon. Uh. I think in the long term, and I'm encouraged that the cybersecurity efforts of the United States government and the private sector and partnership have grown dramatically. It's recognized that, as I think we talked about before, there's no such thing as trusted suppliers.

That bad guys can hacken everybody. So one of the things we're seeing here at the RSA conferences the efforts to raise security to raise assurance, to implement the zero trust kind of principles that President I've mentioned in the Cybersecurity Executive Order about a year and a half ago. Now, those are the kinds of things that are necessary to make sure these technologies, as we come to get the benefits of them, will be dependent on them, and we've

got to make sure they're going to be resilient. They're gonna be up and running when we need them. And that's going to continue to require the public private partnership and greater global cooperation for standards and independent testing of key components of everybody's products. And we're supporting that around the world. To what extent are you concerned that the way that the United States has essentially blacklisted Wahwei spreads to other countries at this point, Well, frankly, I'm not

concerned about it. You know, I've been to twenty six countries for Whahwei, although I haven't traveled since uh March of um, we're still doing business in an awful lot of places. I mean, the fact I mentioned earlier that two hundred and sixty seven the Global Fortune companies have

turned to us for their transformation the Asia Pacific. All these these countries are very interested in in green energy, and we're really becoming a leader in green energy, partnering with folks to help develop greater capabilities to create the green energy, to transmit it, and to store it. And we're gonna get an awful lot of business in the in the Asia Pacific realm, and I think increasingly in Europe.

So there's it's a big world out there, and we've got plenty of business and do But it can be Whawei can be just fine in a world without the United States. I mean to be fair, there is a ton of equipment here in the United States that is running on Huawei parts and other Chinese companies because they were already here before the ban um went into effect,

the US ban against Chinese made components. But can Wahwei have a future you talk about, you know, the global reach that you guys have in globalization, you know, is the U S market crucial to this company going forward? Actually, as I said, we have not had significant revenues in the United States compared to our global revenues. Yes, we can continue to do fine without any revenue from the US.

But when you talk about globalization, the issue of the sanctions limiting the ability of the American semiconductor industries to sell the WAWAEY. Now that has tremendous benefits for the American worker because when we were at twelve billion a year in those purchases, that supports about forty tho American jobs.

So we hope at some point there will be a recognition and there are discussions on some of the tariff issues you solve the editorials in the Wall Street Journal and Washington Post recently trying to get folks to say, let's look dispassionately at tariffs. Let's not put tariffs on Chinese goods if we can't get goods from somewhere else. We have to look at what's in the best interest in the United States. And I think that's a great standard, and I hope over time that that will be something

that the US government will consider. But frankly, we're seeing a change in the global supply chain of semiconductors. The head of Intel was asked on TV last week when the U s will be independent and semiconductors. He said never. And what he said was, and we see the coming out of Europe that there will be a transformation in the semiconductor market globally Asia, US and Europe, and it will be Europe, US and fifty percent Asia. So we're going to see a transfer a globalization UH. And we

have reconstructed our product portfolio and our path forward. So if we're not able to get those chips from the United States, we're still going to be fine, and we're in survival mode. But but we're going to survive in survival mode, but going to survive. Andy, I want to

talk a little bit. You mentioned the supply chain, and I'm wondering what you can tell us about the global supply chain right now and what you're seeing in terms of components And have you seen the constraints that we've all experienced over the last couple of years and particularly over the last fourteen months at this point, are you starting to see those ease Well, UM, not in a substantial way. But what we've been working on is UH

to diversify our suppli shot. We've also adjusted the products that we make to make sure that we have components that we know we can that we can get and we're pursuing those products shortening the life cycle of other products. So the UH and the greater research that we're doing in in computing UH, in UH, the power supplies, UH

in the individual digitalization of sectors. That we're going to find new business in those areas, and we're going to help inform those that are going to make chips around the world that some of the things that we've learned we're going to be sharing with them, and so that there there will be more supplies from around the world. Generally, we've diversified our supply chain for those things we can get, and I think that's what we're gonna see around world.

It's got to be greater diversification so that a company or government can know they'll be able to get it from here, that they'll get it from there, and probably need some capability in the United States so that if really bad stuff happens in the short term and something's essential, then we'll have it. But look at something like the baby formula, Right, you can't just have everything domestic and think that that you're going to have what you need

when bad things happen. Right, you have to have kind of overarching approach and and still somewhat of a refocused, reshaped global supply chain. Yeah, it's certainly something that I talked about earlier in that panel, the Bloomberg Live Panel, when it comes to near shoring, on shoring, I mean people are making sure they've got good backup systems. Uh. Any party, Thank you so much. Chief security officer at Wawei Technologies USA, on the phone from San Francisco,