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Huawei reports record profits despite U.S. pressure campaign

Guo Ping, Huawei's chairman, speaks at the company’s headquarters in Shenzhen, China, on Friday.
Guo Ping, Huawei's chairman, speaks at the company’s headquarters in Shenzhen, China, on Friday. (Billy H.C. Kwok/Getty Images)

BEIJING — Huawei’s profits rose by 25 percent to a record $8.8 billion last year, the company announced Friday, suggesting that the United States’ global campaign against the Chinese technology titan has had no discernible impact on its bottom line.

Reveling in its strong financial results, Huawei’s leaders said the Trump administration was targeting the company for political and anti-competitive reasons.

“The U.S. government has got a loser’s attitude,” Guo Ping, the chairman of Huawei, told reporters while releasing the results. “They want to smear Huawei because they can’t compete with us.”

The Trump administration has “abandoned all table manners” in the way it has dealt with the rise of Huawei, Guo said, adding that he hoped the administration “will adjust its mentality.”

U.S. officials fear that Huawei, which is vying to become the global leader for next-generation 5G mobile networks, has close links to the Communist Party and the military in China and that it might be able to use its networks to spy and conduct cyberattacks.

Huawei announced its results a day after the British equivalent to the U.S. National Security Agency released a scathing assessment of the security risks the Chinese company posed to Britain’s telecommunications networks.

The Government Communications Headquarters Bureau said it can provide “only limited assurance” that the long-term national security risks can be managed in Huawei equipment deployed in Britain and that “it will be difficult” to manage the risk of future products until defects are fixed.

Huawei, the world’s largest maker of telecom equipment, denies the accusations that its equipment could be used for spying.

In an opinion piece for the Financial Times last month, Guo said that the United States was opposed to Huawei because the more its equipment was installed around the world, the more it “hampers U.S. efforts to spy on whomever it wants.” He cited revelations from Edward Snowden about how the U.S. monitored electronic communications.

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Over the past year, the Trump administration has embarked on a campaign to persuade governments around the world to ban Huawei from its networks.

In the United States, the government has already prohibited federal agencies and contractors from buying Huawei equipment, citing national security concerns. Huawei announced this month that it would sue the U.S. government, saying that it had been denied due process and that there is no evidence to support the government’s espionage claims.

U.S. authorities have launched other legal broadsides against the Shenzhen-based company. Huawei’s chief financial officer, Meng Wanzhou, the daughter of the company’s founder, is under house arrest in Canada while she fights extradition to the United States on charges that Huawei breached U.S. export sanctions against Iran.

The actions are widely seen here as part of a broader effort — also encompassing the United States’ trade war against China — to stymie China’s rise in the global economy and stop it from challenging U.S. supremacy.

“The U.S. government is using FUD because of its worldwide hegemony,” said Fang Xingdong, director of the Center for Internet and Society at Zhejiang University of Media and Communications, using an acronym for “fear, uncertainty and doubt.”

“Although it may violate law and ethics, Washington only needs to pay a little to win its interests,” he wrote in the Global Times, a nationalist newspaper that often reflects the foreign policy of the ruling Communist Party. “This is the driving force behind US suppression of Huawei.”

Huawei’s results show the company remains in good financial health. Its sales rose 20 percent from the previous year to exceed $107 billion, another record, in 2018.

The bulk of the improvement came from a sharp increase in smartphones. Huawei shipped 206 million smartphones in 2018, and sales were up 45 percent compared with the previous year.

Sales from its 5G networking division fell slightly, by 1.3 percent, but analysts said they would probably pick up as Huawei begins to roll out its 5G networks. More than 30 countries have awarded Huawei contracts to build its next generation infrastructure.

The company is privately owned and is not required to release financial results, but it has taken to offering an annual report containing some headline numbers.

The U.S. actions against Huawei might have helped it by giving the tech giant free advertising, said Ni Feng, deputy director of American studies at the Chinese Academy of Social Sciences.

“It’s like: ‘See, the Americans are afraid. Does that mean its technology is indeed awesome?’ ” Ni said.

Chinese people have reacted emotionally to the U.S. “bullying” of Huawei, Ni said. “They are more willing to buy Huawei products,” he said.

After Meng was arrested in Canada last year at the United States’ request, some Chinese companies began a campaign to encourage employees to buy Huawei phones rather than iPhones, and some even said they would fine staffers who had an iPhone.

Liu Yang contributed to this report.

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