Chinese tech firm Huawei is planning on laying off hundreds of U.S. workers after landing on a Commerce Department blacklist that has savaged its ability to do business stateside, the Wall Street Journal reported on Sunday.
The layoffs are expected to hit Futurewei Technologies, a Huawei research and development unit with divisions in California, Texas, and Washington state that employs roughly 850 people, per the Journal. Sources told the paper that hundreds of jobs are expected to be lost, although some Chinese nationals are “being given the option of returning home and staying with the company”:
Futurewei employees have faced restrictions communicating with colleagues in Huawei’s home offices in China following the May 16 Commerce Department decision to put Huawei on its so-called entity list, which blocked companies from supplying U.S.-sourced technology to Huawei without a license, according to these people.
Several employees have already been notified of their dismissal, while additional planned cuts could be announced soon, these people said.
In May, the Trump administration added Huawei and 68 affiliates to an “entity list” that restricted transfers of U.S. technology to the company without government approval amid warnings from the intelligence community that the company, the world’s largest telecommunications gear supplier, could be acting as a proxy for Chinese espionage agencies. Other U.S. moves against Huawei have included allegations of trade theft, fraud, and violations of sanctions on Iran—all of this occurring alongside a brewing U.S.-China trade war that has resulted in economic damage to both sides. Huawei obviously denies the allegations and claims that the U.S. is resorting to unfair trade practices because it is outcompeting American firms.
While Donald Trump recently said after a meeting with his Chinese counterpart, President Xi Jinping, that he would relax sanctions on Huawei, Commerce Secretary Wilbur Ross has clarified that the department would only issue licenses where “there is no threat to U.S. national security.” Huawei chairman Liang Hua recently told reporters in Shenzen, China that there has not been “any tangible change” to the situation. According to the Journal, the U.S. layoffs are in part because Futurewei’s R&D efforts “could amount to U.S.-sourced technology under Huawei’s entity listing,” and its ability to coordinate with its ownership in China has been seriously damaged.
Huawei Chairman Ren Zhengfei has also said that the company stands to lose $30 billion in revenue in 2019 and 2020 due to the restrictions, which have caused many American suppliers to sever ties and damaged the viability of its product lineup (including the cancellation of a new model of laptop and forcing it to quickly develop an alternative to Google’s official Android mobile OS). According to the Journal, Ren told a French newspaper that its own mobile OS, dubbed Hongmeng, was originally designed for use in telecom networks and “we don’t have a clear plan yet” for populating it with apps.